Niti Aayog bats for lower 5G spectrum price

Telecom operators may be able to get 5G spectrum at a lower price if Niti Aayog’s recommendation is accepted by the government. The organisation, which acts as a think tank for the government, has suggested that operators be given spectrum for a 30-year period but the reserve price should be what the Telecom Regulatory Authority of India has calculated for a 20-year period. This way, the reduction in the reserve price works out to be 36% compared to what the regulator had recommended in 2018.

The recommendation assumes significance because Niti Aayog’s CEO is also a member of the Digital Communications Commission, which is the highest policy-making body on matters related to the telecom sector. The DCC is an inter-ministerial body, which apart from senior officials of the department of telecommunications, also has representatives from the finance ministry as well as the department for promotion of industry and internal trade.

Telecom sector analysts said that Niti Aayog’s recommendation makes sense and the government should accept it. The 36% reduction in reserve price works out for a 20-year period, but Trai has added a rider that if the spectrum is given for a 30-year period, then the price charged should be 1.5 times of the 20-year period.

Since the government had decided last year in September to give spectrum for a 30-year period, Niti Aayog believes there’s no rationale behind calculating a price for 20 years and then adding multiples to it.

Further, by adding the multiple there’s no reduction in prices compared to 2018. For instance, operators need to fork out Rs 37,292 crore for the minimum quantum of spectrum for a 5G network as per the reserve price worked out by Trai for a 20-year period. If they are charged 1.5 times of this for a 30-year period, this goes up to Rs 55,938 crore. This price is no reduction compared to the price given by the regulator in 2018 when it worked out to be around Rs 50,000 crore to buy the same quantum of spectrum.

So, effectively what Niti Aayog is saying is that the reduction in the reserve price gets nullified by adding the multiple.

To resolve the issue, a DoT committee has suggested that operators be given a choice to buy spectrum for either 20 or 30 years. Analysts say that this option is just a compromise and goes against a policy decision earlier taken by the government that in future spectrum should be auctioned for a 30-year period.

It could not be ascertained what the other members of the DCC have stated on this issue. A final decision would be taken by the Union Cabinet when it takes up the matter, probably next week, but analysts said that the suggestion put forward by Niti Aayog is a pragmatic one.

On their part, the operators have sought a reduction in prices by around 90-95%, which certainly is not feasible, analysts added. Financial Express