India’s telecoms regulator is expected to sharply increase the amount of spectrum in the next auction over last year’s level, raising expectations it will be the largest spectrum sale ever.
The next auction, which the government aims to hold this fiscal year — barely a year after last year’s – is now expected to include spectrum in the highly efficient 700MHz band for the first time. The availability of 770MHz of the 4G band across the country’s 22 service areas would significant boost the amount the government could raise in the auction.
The Telecom Regulatory Authority of India (TRAI) is examining how much spectrum should be auctioned and is considering allocating as much as 2,000MHz across seven different bands, the Economic Times said.
A senior official said TRAI could “suggest rational” pricing to stimulate interest in the auction. TRAI chairman RS Sharma said yesterday it will recommend spectrum pricing to the government by the end of the month.
Credit Suisse warned earlier in the month that the largest three mobile operators will face increased financial pressure if the country’s planned spectrum auction goes ahead as scheduled.
The brokerage said the spectrum sale will damage operators’ returns even if it’s only a partial success.
Telecom Secretary Rakesh Garg said recently the sale will happen in May or June.
Last year’s auction of about 470MHz of spectrum in four bands raised a record INR1.1 trillion ($17.6 billion). The top three operators spent INR895 billion ($14.3 billion), or 85 per cent of the total, forcing them to raise their already-high debt levels.
The country’s mobile operators have said the 700MHz sale should be put off for two years until the 4G ecosystem has developed more.
The government has set a target of raising INR428.6 billion ($6.4 billion) from communication services for this financial year, which includes the sale of spectrum as well as licence fees. However, the Times said that the chances are slim that the auction will be held in the current fiscal year.
The Times quoted Prashant Singhal, global telecoms leader at Ernst & Young, as saying: “The government should first give a clear timeline of auctions for the next two to three years, including visibility on availability of spectrum bands, reserve prices and intervals, such that the industry can make their spectrum and technology bets with more clarity.”