Finance ministry critical of 5G spectrum pricing

4 May 2020

A finance ministry taskforce has recommended rationalising the prices of the upcoming 5G spectrum auction to ensure that next generation services can be made affordable to the public, arguing that the current price level is too high, the Economic Times writes. A report from the taskforce acknowledged the level of financial stress in the sector, noting that some operators were in a ‘precarious position’ due to the Supreme Court’s decision on Adjusted Gross Revenue (AGR) in October last year, which handed the industry a bill for around INR1.5 trillion (USD19.9 billion), and just three months to find the funds. The finance ministry’s report also pointed out that ‘demand for spectrum is likely to be subdued as consolidation has reduced the number of players in the sector to effectively only four,’ adding that ‘robust’ participation in the auction from private industry would be needed to achieve the government’s communications and digital policy goals. The report also touched on the substantial financial burden of deploying the necessary infrastructure to fully implement 5G services and to satisfy growing demand for mobile services, estimating that an additional one million new towers need to be established by 2025, with around three million kilometres of fibre-optic infrastructure by the same date. The setup of each tower requires investment of around INR50 million, the report added.

The Department of Telecommunications (DoT) has defended the pricing on the basis that it has adopted the figure recommended by the Telecommunications Regulatory Authority of India (TRAI), and that the terms must be approved by the cabinet. As previously reported by TeleGeography’s CommsUpdate, the TRAI published its recommendations on the spectrum auction back in August 2018, suggesting the sale of frequencies in the 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz, 2500MHz and 3300MHz-3600MHz bands. For the 700MHz band – which had been auctioned in 2016 but attracted no bidders due to the high price – the TRAI suggested a price tag of INR62.7 billion per MHz of pan-India frequencies.