Proposed 5G spectrum auction will not generate enough income for the government

The sale of 5G spectrum will generate only Rs 10,000 crore as advance payment according to DoT officials, which is far below the government’s expectations, as some major telcos are facing financial crisis due to adverse decision of AGR . According to a report by ET Telecom, sales of the next spectrum can fetch only around Rs 35,000-40,000 crore as against the airwaves of Rs 5.86 lakh crore. Telecom operators make about 25% upfront payment for the sub-1 GHz band and 50% for the higher band which they win in the auction. The remaining amount is paid in installments over 16 years.

Airtel and Vodafone Idea like to miss spectrum auction

Bharti Airtel and Vodafone Idea , according to officials, are likely to auction the 5G spectrum. The two major operators jointly suffered Rs 89,000 crore in AGR dues following the Supreme Court’s adverse decision. Last week, Airtel CEO Gopal Vittal said that 5G prices were beyond his reach.

On the 3.5 Ghz band, TRAI has recommended a price of Rs 50,000 crore for 100 MHz spectrum. 5G requires a large block of spectrum. 100 MHz spectrum for 50,000 crores, we cannot afford it. We believe this is too much. Gopal Vittal, MD and CEO of Airtel for India and South Asia, said that we will not take it at those prices.

Vodafone Idea, which is in the midst of a costly merger, is going to miss the massive auction as its executives. The company also regretted the high prices of 5G on several occasions. Reliance Jio Infocomm is the only telecom company to bid for 5G airwaves but not much according to telecom officials. “Of the three players, Jio can take some 5G spectrum in addition to some 4G, but not much. We expect this first mover to do so to reap the benefits, ”a telecom official revealed.

5G pricing criticized by COAI

The 5G pricing was also criticized by the Cellular Operators Association of India, which represented all private players in the industry. Director Rajan Mathews said that the government’s plan for 5G auction is commendable, with unrealistic pricing of major spectrum bands only coming in the way of 5G expansion.

He estimated that the government would be able to raise around Rs 6,000-7,000 crore as an advance payment from the auction. This means that the government will reduce its projected budget to Rs 1.33 lakh crore for the coming financial year.