On Monday, the Telecom Regulatory Authority of India (Trai) reiterated its stance on the difficulty of spectrum pricing, together with that of 5G, for the upcoming auctions. This was in response to the Digital Communications Fee, the apex decision-making physique of the Division of Telecommunications, which had sought a evaluation of the Trai’s August 2018 suggestions on the public sale of spectrum. The fee’s name for reviewing the Trai’s suggestions got here amid considerations over the monetary well being of telcos, and worries that demand for spectrum is more likely to be muted as consolidation within the sector has successfully left solely three personal telecom service suppliers. However, in its response, Trai has stayed with its earlier place, stating that every one related elements, such because the methodology, assumptions, in addition to developments between the spectrum public sale held in October 2016 and its suggestions, launched in August 2018, have been thought of.
Through the years, the telecom sector has been a serious income for the federal government. And at a time when the Centre is struggling to fulfill its income targets, increased proceeds from spectrum auctions might present the much-needed enhance to authorities coffers. However the temptation of income maximisation needs to be resisted when there are official considerations over the monetary well being of the sector. Aggressive bidding by telcos within the 3G auctions in 2010 marked a turning level within the business’s fortunes. Because of the pile-up in debt, extremely indebted telcos exercised restraint within the 2016 spectrum sale, with the federal government realising solely Rs 65,789 crore as income towards Rs 5.63 trillion (base value) price of spectrum that had been put up on the market. The worth warfare, which started in September 2016, solely exacerbated the already precarious monetary place of incumbents. Their deteriorating funds have additionally taken a toll on the federal government’s income. In 2018-19, the Centre was capable of gather solely Rs 39,245 crore via licence charges and spectrum utilization prices, as towards the preliminary goal of Rs 48,661 crore. Compared, it had collected Rs 70,241 crore in 2016-17. Whereas common revenues per consumer (ARPUs) have risen of late, a turnaround remains to be a while away. With precarious funds, a repeat of the 2016 public sale is a chance.
At such excessive costs, cash-strapped operators will discover it tough to bid, with out sinking much more into debt. This might impression their capital expenditure, leaving them with fewer assets to put money into towers and fibre optics. Acknowledging the problems plaguing the sector, the telecom minister, Ravi Shankar Prasad, has not too long ago arrange a panel to rationalise levies, and to look into different points. Whereas it is likely to be tough to put aside Trai’s suggestions, the federal government would do effectively to think twice via the implications of the suggestions, earlier than speeding to public sale high-priced spectrum.