5G spectrum price slashed. TRAI slashes reserve price for telecom spectrum by up to 40%

The Telecom Regulatory Authority of India (TRAI) on Monday suggested reducing the reserve price for spectrum auction, including the 5G airwaves, by 35-40 per cent compared to the base price in the last round of auction.

Releasing its recommendations for the auction of airwaves, TRAI also suggested easier payment options for the operators. “For the long-term growth and sustainability of the telecom sector, infusing liquidity and encouraging investment, telecom service providers should be allowed easy payment options, including part payment with flexibility of moratorium,” the regulator said.

New proposals

All available spectrum in existing bands — 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz — and new spectrum bands — 600 MHz, 3300-3670 MHz and 24.25-28.5 GHz — will be put to auction. “For the first time, more than 1.04 lakh spectrum will be put into auction and there is an average reduction of 39-40 per cent in the reserve prices from the previous auctions,” a senior TRAI official told BusinessLine.

As per the new proposals, the base price for the coveted 700 MHz band works out to be ₹3,927 crore per MHz, which is 40 per cent lower than earlier. The price has been reduced because this frequency band is crucial for the 5G roll-out and two previous attempts to sell it had not succeeded due to the high base price.

For the other 5G frequency band of 3300-3670 MHz, the all-India reserve price adds up to ₹317 crore per MHz, which is over 35 per cent lower than the ₹492 crore/MHz suggested by the regulator last time.

The government had garnered only ₹77,815 crore by sale of an aggregate 855.60 MHz of spectrum last year (in March) even though spectrum worth ₹3.92-lakh crore was up for sale. The sale, therefore, was dull as compared to the auctions in 2014 and 2016 where the proportion of sold spectrum was over 80 per cent and 40 per cent, respectively.

Other decisions

The other major decision includes allowing non-telecom enterprises to obtain the spectrum and establish their own isolated captive wireless private network. If this recommendation is implemented, enterprises can circumvent operators in order to set up their own networks.

TRAI has also proposed rationalising of spectrum caps which includes a cap of 40 per cent on combined spectrum holding in sub-1 GHz bands, and a separate cap of 40 per cent on all other combined spectrum holding. Overall cap across all bands has been done away with.

Welcome move

Prashant Singhal, Global TMT Emerging Markets Leader, EY, called it a welcome move. “In particular, reducing the 5G auction base price in the 3,300-3,670 MHz band by approximately 36 per cent was much warranted. However, even with the reduction in base price, 5G spectrum price in India is still higher, which is 2.6x of Germany, 3.8x of the UK, and 4.4x of South Korea,” he said.

The price needs to be further pruned to offer affordable 5G services across the nation, Singhal said. “On the other hand, provision for surrender of spectrum is a good move. We need to carefully evaluate the mechanism and the commercial arrangement of such surrender,” he added.

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