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2020 and beyond

The new space partnership of Bharti Global with the UK government transcends the telco to a new level, where, albeit being pitched against SpaceX, Amazon and Telesat, the consortium has spectrum priority all over the globe. Satellite broadband services will be offered everywhere where fiber cannot reach, delivering high-speed, low-latency connectivity services to a wide range of customer sectors.

This may also usher in a new era, where the user could be buying both, voice and data from big tech companies and not telcos. Satellite Wi-Fi being ubiquitous, the spectrum would commoditize connectivity. Microsoft’s acquisition of Affirmed Networks and Metaswitch, and Amazon’s interest in Boost, and closer home, partnerships of all the four telcos with the Big Tech companies is no coincidence.

The upcoming auction, proposing to offer spectrum worth ₹3.92 trillion in March 2021 is expected to see moderate response. Bharti has ₹129 billion of spectrum coming for renewal at TRAI’s recommended spectrum reserve prices. However, the company has already bought spectrum from Tata Tele, Telenor and Videocon, and thus does not need to renew its entire spectrum. With the Vodafone and Idea merger having added significant spectrum in VIL, the telco, in the upcoming auction may need to buy spectrum worth only ₹19 billion. RJio, with 850 MHz, originally owned by RCom, looking to augment its network capacity and increase market share, may go in for an aggressive bid.

The upcoming auctions will not include spectrum bands that support 5G services. In the backdrop of high spectrum prices, nascent stage of the eco-system, relatively low penetration of 4G services, limited paying capacity of the Indian consumer, and the precarious position of the balance sheets of telcos, the operators are divided on the actual rollout timelines for 5G services. As the subscribers upgrade from 2G to 4G, and the operators go in for the next round of tariff hikes, thereby driving revenue growth, 2021 may somewhat restore the telcos’ pricing power. With the developed world leveraging 5G, it may not be prudent for India to ignore the potential to unlock ₹3408 billion through the deployment of 5G over the next four years for too long.

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