The Niti Aayog wants 5G spectrum be offered for 30 years at a reserve price proposed by the regulator for spectrum held for 20 years, bringing down the payout by 36 per cent.

The telecom regulator had cut the reserve price by 36 per in its revised recommendations in April compared with the price set in 2018 but said the price was valid for spectrum for 20 years and for spectrum for 30 years, the price will be 1.5 times the reserve price for 20 years.

This complex bit of spectrum formula meant the operators would have paid Rs 47,550 crore for spectrum for 30 years in the forthcoming auctions marginally less than the Rs 49,200 crore at the 2018 price.

However, the Niti Aayog's suggestion that the reduced base price for 20-year spectrum be applicable on spectrum held for 30 years, means operators will pay Rs 31,700 crore for 100MHz of 5G spectrum at the base price against Rs 49,220 crore at 2018 prices.

The think tank as part of the inter-ministerial comment on the cabinet note prepared by the Department of Telecommunication (DoT) recommended the radio waves should be given for 30 years.

The Digital Communications Commission of the DoT based on the recommendations of Trai — The Telecom Regulatory Authority of India — had recommended auctions for 20 years, while suggesting no change in pricing.

Good shape

Several brokerages believe that the top three telecom companies are in fine fettle and will be able to bid aggressively for 5G spectrum when it is auctioned next month. Bernstein says tariff hikes are likely in second half of 2022, led by Bharti Airtel, helping the operator achieve its medium-term ARPU target of Rs 200.

Brokerage firm CLSA India called the telecom sector a “growth haven” with the top three players – Bharti Airtel, Reliance Jio and Vodafone Idea — reporting a revenue growth of 8 percent on a sequential basis and 19 percent on-year in the March quarter.

“The market structure has become more favourable, with two strong players and two weak players, and regulations have become supportive on structural and liquidity measures announced by the government,” brokerage firm Morgan Stanley India said in a recent note.

The regulator has recommended a mega auction plan of over Rs 7.5 lakh crore for over 1 lakh megahertz spectrum in case government allocates it for a period of 30 years. In the case of 20 years, the total value of the proposed spectrum auction will stand at around Rs 5.07 lakh crore at the reserve price, according to the back-of-the-envelope calculation.

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 about 39 per cent lower reserve price for all bands, compared to the prices proposed in the previous recommendations in 2018.