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Record 1 lakh MHz 5G sale, 40% cut in base price likely

NEW DELHI: Paving the way for ushering in 5G telephony in India, telecom regulator Trai recommended sale of over 1 lakh MHz of spectrum worth Rs 7.5 lakh crore at reserve price for a period of 30 years – a record in terms of total quantum put up for sale. It also recommended a cut of around 40% in reserve price in 700MHz band against previous auctions to encourage financially strained companies to bid aggressively.
The auctions, which are expected to happen later this year after the government – and thereafter the Union Cabinet – takes stock of Trai’s recommendations, will for the first time see sale of spectrum in bands that are globally used for 5G services. These are the mid-band frequency of 3,300-3,670MHz and the millimetre wave of 24.25-28.5GHz.
Both the bands have heavy data-carrying capacity. They are expected to carry the bulk of additional data usage that the 5G era will usher in.
Trai chairman P D Vaghela said the regulator had carried out a detailed review of the views that it had received on its consultation paper before coming out with the recommendations that are now placed in front of the telecom ministry.
“We have considered new data and information, while also taking stock of the industry and other stakeholders’ comments. We feel these recommendations are healthy for the country’s telecom sector, though the final view will be taken by the government,” Vaghela told TOI.
Trai took a liberal view of pricing of spectrum in the 700MHz band, while having a similar stance on sale in the 600MHz frequency where airwaves will be sold for the first time. Spectrum in the 700MHz band failed to see any sales in the last two auctions and, considering the poor response previously, Trai has cut the reserve prices here by nearly 40%. The regulator feels that lower prices will encourage companies such as Reliance Jio, Airtel and Vodafone Idea to buy the spectrum in this round, which will help improve quality of telecom services in the country.
Prashant Singhal, partner at Ernst & Young India, said lowering of prices is a “good move”, though adding that “prices are still high when compared to those prevailing in other markets such as the UK, Germany, Spain and South Korea”. “We need to realise that per user revenue of telecom companies in India is one of the lowest in the world. Thus, reserve prices could have been even more aggressive,” Singhal said.
However, Trai said it has adopted a variety of methodologies to arrive at its recommendations. “We hope that these auctions will help spur growth in telecom,” Trai secretary V Raghunandan said. He added that 5G spectrum put up for auction in new bands are already deployed across some of the world’s developed countries such as the US, South Korea, and Japan.

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