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Disappointed: Telecom industry body on TRAI recommendations on 5G spectrum. Here’s why

By Priyanka Verma 
Updated Date

New Delhi: The top telecom industry, body, COAI on Tuesday said it was disappointed by the regulator’s recommendations for the auction of 5G spectrum bands. And further asserted that “pricing is too high.” The Telecom Regulatory Authority of India on Monday recommended a 36% cut from its earlier proposed base price for the auction of a prime spectrum for 5G networks.

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What Trai had recommended?

With large swathes of spectrum remaining unsold in the last two auctions, Trai recommended to the government for selling airwaves in all existing bands of 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz and new slots of 600 MHz, 3300-3670 MHz and 24.25-28.5 GHz.

It has suggested a lower reserve price for all bands, compared to the prices proposed in the previous recommendations in 2018.

In a 20-year scenario, the floor price in the 700 MHz band has been cut by 40 per cent to ₹3,927 crore per MHz for a pan-India spectrum, while the same in 800 MHz has been lowered by 22 per cent to ₹3,620 crore per MHz, pan-India.

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For the prime 5G frequency of 3300-3670 MHz band, 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 Trai last time around.

What experts said?

However, some experts pointed out that the reduction proposed in pricing, though largely on expected lines, is not in sync with the 90 per cent drop that the industry had been asking for.

Credit Suisse in its note said recommendations are “incrementally positive” and that Jio and Airtel are well placed to participate in the auction. “Trai recommends 25-50 per cent reduction in spectrum pricing; incrementally positive but nothing transformational,” Credit Suisse said and further added, the 700MHz band could likely see demand by telcos

Emkay Global noted that the reduction proposed in key bands of 3300-3670 MHz and 700 MHz bands, but went on to say that: “Although the reduction is largely on expected lines, it is lower than the industry’s demand of about 90 per cent cut”.

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In its report, ICICI Securities said spectrum prices for 700MHz have seen a steeper cut of 58 per cent (on a comparable basis) “but still remain expensive”. “Spectrum supply remains adequate to easily accommodate three players for C-band and thus, we expect bidding intensity to remain muted in the upcoming auction,” ICICI Securities said.

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