Govt clears plans for next spectrum sale; will restrict vendors

17 Dec 2020

The Indian government has approved plans for the next round of spectrum sales, with a total of 2,251.25MHz to be put up for auction in March 2021, the Economic Times writes, citing a government statement. The frequencies span the 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz bands – with the 5G-compatible 3300MHz and 3600MHz ranges notably excluded from the sale – and have been valued at a total of INR3.92 trillion (USD53.3billion), based on the reserve prices set for the airwaves. Full details of the auction will be published along with a Notice Inviting Applications later this month. The high reserve prices are expected to limit participation in the auction, although the reduction in potential competitors for the airwaves may encourage cellcos to purchase crucial frequency blocks at the reserve prices. Each of the three remaining privately-owned cellcos – Reliance Jio Infocomm (Jio), Bharti Airtel, and Vodafone Idea Limited (VIL, offering services under the Vi brand) – have licences due to expire in the next few years, but the auction is unlikely to see the intensity of bidding witnessed in the 2015 auction. Several participants in that sale were facing ‘must-win’ situations where failure to secure spectrum in certain circles would have forced them to shut down operations in those areas, and the scarcity of available frequencies at the time forced operators to battle for airwaves, driving up prices. In the upcoming sale, however, there is sufficient spectrum available that operators should not need to fight over the frequencies. Instead, the stressed financial status of the trio – in particular Vi – is likely to be the deciding factor in participation. As such, the government will allow winning bidders to submit a down payment of 25% to 50% of the end price, with the balance to be cleared over 16 annual instalments after a two-year moratorium.

In a separate development, meanwhile, the government has announced plans to restrict the vendors that can supply telecom equipment to operators in India. The Hindustan Times writes that the Cabinet approved the plans as part of a national security directive. Under the policy, the government will curate a list of ‘Indian trusted sources’ that will be permitted to sell to operators in India. The move has been interpreted as a strike against Chinese vendors ZTE and Huawei, as tensions between Beijing and Delhi have escalated in recent years. Additionally, though, the restriction may incentivise operators to source equipment from India-based suppliers, in line with the current administration’s major policy goal of establishing India as a hub for telecom equipment research, development and manufacturing.