DoT Likely To Raise Only Rs 40,000 Crore In Spectrum Auction: Report

Banks, especially government-backed ones, are reluctant to lend further to telecom companies since they are already under a lot of debt.

The Department of Telecommunication (DoT) will likely raise only Rs 40,000 crore in its next spectrum auction, much lower than the Rs 66,000 crore it had raised in 2016, The Economic Times reported.

This primarily because of the financial condition of the telecom sector and because many operators only need top-up spectrum now.

The official said that the sector has undergone consolidation and operators have sufficient capacities now.

The DoT arrived at this figure on the premise that the government will reduce spectrum prices to the extent the regulator proposes. The final price of airwaves will be decided before November 15.

“Competition is always good for the sector and we know, if we want more competition, we will need to lower the reserve price of spectrum. The price needs to keep the financial condition of the telecom sector in mind,” the official was quoted as saying.

The Telecom Regulatory Authority of India (TRAI) had recommended in August the auction of airwaves across the 4G bands of 700 MHz, 800 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz, other than 5G spectrum in the 3,300-3,600 MHz.

The starting prices for these were lower than those set in the 2016 sale, especially for the premium 700 MHz band, the base price for which was cut by 43 percent. The minimum rate for the next-generation 5G spectrum was set as Rs 492 crore.

Even this was found to be too expensive by industry players because of pressures of revenue and profitability. Experts compared this price to South Korea’s Rs 65 crore per unit at a recent auction. An internal committee of the department said there was at least a 25 percent scope for further reduction in the 5G spectrum’s price.

“A section of the department feels that we should make these calculations and reduce the price ourselves instead of sending it back to the regulator for a review since the regulator has already given its calculation,” the official said. – Money Control