Just as we were planning to bid adieu to 2019 on a slight note of optimism, the sword, which perpetually hangs over the industry, reared its ugly head again.
December saw all the three service providers increase tariffs from 15-40 percent, with promise of a better leverage ratio and improved ARPU. Vodafone saw hope of continuance, and Airtel reiterated commitment of its Rs 20,000 crore annual investment.
On December 20, Digital Communications Commission (DCC) cleared the 5G spectrum auction for March-April 2020, anticipating collecting Rs 5.22 trillion, if bids for all the 8300 units of 4G and 5G airwaves are received. The DCC has not reduced the prices from what was recommended by TRAI. Successful bidders will have to pay 25 percent of the amount upfront for sub-1 GHz, and 50 percent upfront for higher frequency bands. Instalments will be spread over a period of 16 years, with a two-year moratorium for payment after the upfront amount is paid. Given the high reserve prices, acute balance sheet stress of the carriers, and absence of an immediate 5G business case, it remains to be seen how the auction plays out.
The telecom services sector is reeling under a Rs 4.3-trillion debt and an additional Rs 926.41 billion following the Supreme Court ruling upholding the DoT’s definition of AGR. Moving ahead, as 4G licenses expire, spectrum needs to be bought back, network expansion be done, investment in newer technologies be made, and subsequently, funds are required for buying 5G spectrum and building a 5G ecosystem. The industry definitely needs to be financially viable. Will the government step up, and restore the dignity this industry deserves, or will it go ahead and play by the book? Is there still a possibility that India can jump onto the 5G bandwagon as North America, which is planning 74 percent of mobile subscriptions as 5G, North-East Asia 56 percent, and Europe 55 percent, by the end of 2025?
2019 was an exciting journey, albeit a nail-biting one. May 2020 be a major turning point in the history of the Indian telecom sector, and may it be able to play the key role it was always meant to, to make Digital India a reality!