DELHI ( WEB DESK )
With the latest delays pushing the planned 4G spectrum auction into 2021, as well as exorbitant prices set for 5G spectrum, India may be slow to embrace the latest mobile technology
When it comes to spectrum auctions in India, 2020 has been an unforgiving year. The government initially had plans to auction off both 4G and 5G spectrum this year, but it now seems very likely they will not allocate spectrum in either band until 2021.
The country’s 4G auction hit its first stumbling block back in summer, when the onset of the coronavirus pandemic delayed the process until October. But this date also came and went, with the Department of Telecommunications (DoT) arguing that various “administrative issues” had caused further delay and that the auction will now be scheduled before the end of the fiscal year in March 2021.
The auction is set to include 700MHz, 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz, and 2,500MHz bands.
For Vodafone Idea (now Vi) and Bharti Airtel, hamstrung as they are by falling profitability and adjusted gross revenue (AGR) dues amounting to billions of dollars, this delay could actually be a blessing, allowing them more time tackling these more pressing issues. For Reliance Jio, on the other hand, bolstered by around $20 billion of investment from various players including Google and Facebook, such a delay will be painful.
“We are unable to find any reasonable rationale behind this sudden pause in a successful and fruitful policy of auctioning all available spectrum every year,” said the company in a letter to the DoT.
Regardless of their varying financial positions, the 4G spectrum licences of all three operators expire in 2021, so this auction will quickly become an unavoidable necessity.
But this necessity itself could, in turn, cause further issues for the nation’s 5G spectrum auction, due ambiguously at some point next year. Fitch Ratings has said today that too much focus by the government on 4G could see the 5G auction pushed back yet further.
“5G spectrum auctions could be delayed if the government prioritises 4G auctions in 2021 to allow telcos to renew spectrum in 800/900 Mhz bands in certain states,”said Fitch.
Cost is once again a key driver here. India’s telcos have long complained that spectrum costs remain too high, with Vi and Airtel both suggesting that they will not purchase any 5G spectrum at the current reserve price. At the end of last month, Airtel CEO Gopal Vittal reiterated that the company would pass on 5G if the current reserve price stands.
“We gather from DoT (Department of Telecommunications) that a spectrum sale is likely during January-March next year, but in case 5G airwaves are sold, we can’t afford it at current reserve prices recommended by Trai as there would be no business case,” he said.
The combined 4G and 5G spectrum auctions are currently expected to raise around $70.9 billion for the Indian government.
Naturally, winning the so-called ‘5G race’ has been a hot topic around the world throughout this year, and will surely continue in various forms for many years to come. But would a delay in 5G really be so bad for India? Given the current telecoms climate – where Vi continues to decline despite drastic cost saving methods and thus the country moves closer to a dreaded duopoly, as well as the aforementioned crushing AGR debts – adding the expensive rollout of 5G to the mix seems problematic to say the least.
Perhaps instead the Indian telcos can take this delay as an opportunity to learn from the 5G successes of their international peers, allowing them to better monetise the new technology when it finally does become available.
Courtesy…. Total Telecom