The Telecom Regulatory Authority of India (TRAI) has paved the way for a mega spectrum auction this year which could net the Centre over ₹5 lakh crore if all of it gets sold.

While this is good news for a Finance Ministry grappling with Budget deficit, the additional payout will burden the telecom sector reeling under debt.

TRAI on Wednesday came out with its recommendations on the reserve price for spectrum across seven frequency bands, including the crucial 700 MHz band, considered the most suited for offering mobile broadband services/4G. Spectrum in the 700MHz band will go under the hammer for the first time.

Telcos’ opposition Top telecom players — Bharti Airtel, Idea Cellular and Mukesh Ambani’s Reliance Jio — had opposed the auction of 700 MHz spectrum this year, saying that the ecosystem — low-cost handsets, network equipment — was not ready yet.

TRAI fixed the reserve price for 700 MHz at ₹11,485 crore per megahertz pan India. This is twice the price fixed for the 800 MHz band. The sector regulator has also issued the recommendations on valuation and reserve price of spectrum in 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz. The biggest demand is expected to be for 2100 Mhz and 2300 MHz, both considered to be suitable for data services. For 1800 MHz and 2500 MHz, the reserve price has been fixed at ₹2,873 crore and ₹817 crore, respectively.

TRAI has also suggested that the Department of Telecom (DoT), in co-ordination with the Defence Ministry and the telecom service providers (TSPs), should complete the harmonisation process in the 1800MHz band before the upcoming auctions.

TRAI has also asked the Centre to make it mandatory for telcos to actually launch services to meet roll out obligations. Until now, operators were required to only roll out their network within five years with no deadline on launching services.

The regulator has suggested that spectrum be taken back from Aircel and Tata Teleservices in two circles each for inefficient utilisation. This is the first time it has proposed such an action against operators who have taken spectrum but have not managed to get many users. Aircel in Haryana, for example, has only 3,000 users.

The recommendations will be considered by the Telecom Commission and go to the Cabinet.

Industry veterans have said the Centre should consider the auction carefully, as the sector is not in a good shape. “Currently operators are busy rolling out services for the spectrum acquired and grappling with challenges of servicing debt and maintaining profitability and cash flows,” said Hemant Joshi, Partner, Deloitte Haskins & Sells LLP.

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