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The Government budgeting ₹54,000 crore for the financial year 2022 from the telecom sector, versus ₹33,700 crore in this fiscal, could include receipts from potential spectrum auctions of 5G bands.
“We believe this could include receipts from potential spectrum auctions on the 5G bands (eg 3.3 GHz to 3.6 GHz), given that most upfront payment for spectrum auctions in F21 would be collected in March 2021,” brokerage firm Morgan Stanley said in a report.
According to the Budget documents, the Government has lowered revenue estimates from the telecom sector to ₹53,986 crore for the next financial year. For FY21, the Finance Ministry had projected a revenue of ₹1.33-lakh crore from the telecom sector, which was slashed to ₹33,737 crore in the revised estimates presented on February 1.
“Given that operators’ focus will be more on acquiring higher bands which require 50 per cent of spectrum amount to be paid upfront, a total spectrum purchase of $5 billion is more likely. With spectrum in the 3.3-3.6 GHz band (5G spectrum) priced at $7 billion for pan-India 100 MHz block, the government's expectation of $5 billion implies that either 5G spectrum auctions will not take place in FY22, or it expects the price of 5G spectrum auction to be lowered in future or operators bidding for spectrum only in few circles. In either case, the Government's budgeted estimates suggest delays in 5G capex for telcos,” according to a report by Jefferies India Pvt Ltd.
“The government's budgeted receipts of $4.6 billion in FY21 imply upfront spectrum payments of $1.8 billion, which is in line with upfront payments that Bharti Airtel and Reliance Jio Infocomm will have to pay for spectrum renewals. It also expects receipts to grow 60 per cent YoY in FY22 to $7.4 billion, implying upfront spectrum payments of $2.5 billion, which suggests that 5G spectrum capex may be delayed, it added.
Consequently, it appears the Government expects a 52 per cent YoY decline in communications receipts in FY21. This is largely because of the two-year moratorium given on deferred spectrum payments to telcos, which are in effect over FY21-22 and negligible Adjusted Gross Revenues collections in FY21, Jefferies India said.
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