Telecom Minister assures of reforms in spectrum pricing, auctions this fiscal

New Delhi: Telecom Minister Ravi Shankar Prasad on Monday assured the industry of "reforms" in spectrum pricing, and said auctions will take place in the current financial year, even as telecom giants warned that high pricing could further hit the debt-ridden sector and impact 5G deployments.

Speaking at the India Mobile Congress 2019, Prasad said the government was aware and alive to problems and challenges being faced by the industry.

"Spectrum auctions will be done this financial year... We are undertaking some reforms in spectrum pricing as well," Prasad said.

Prasad said the government has sought to create a favourable atmosphere for telecom companies to operate and is "alive to the problems and challenges faced by the industry".

The Telecom Regulatory Authority of India (Trai) had last year recommended auction of about 8,644 MHz of telecom frequencies, including those for 5G services, at an estimated total base price of Rs 4.9 lakh crore, but the financially-stressed industry that is buckling under high debt, had argued that proposed prices are unaffordable and exorbitant.

Industry players have been pointing out that average price of 5G band auctioned in countries like South Korea, Spain, the UK and Italy comes out to be Rs 84 crore/MHz, whereas Trai's recommended price for the same band is 5 to 6 times higher at Rs 492 crore/MHz.

IMC, which is a key annual event for the Indian telecom industry, however did not see attendance of top corporate leaders like Reliance Industries' Chairman Mukesh Ambani and Bharti Enterprises Chairman Sunil Mittal this time.

Even the next-generation leaders - Akash and Isha Ambani (children of Mukesh Ambani) and Kavin Bharti Mittal (scion of Bharti group) skipped the event. Also missing in attendance were Ananya Birla (daughter of Kumar Mangalam Birla), Wipro chairman Rishad Premji. Transport Minister Nitin Gadkari and Home Minister Amit Shah also gave the event a miss.

Cellular Operators' Association of India (COAI) Director General Rajan Mathews said the government's assurance on reforms in the spectrum pricing spells a "big relief" for telecom companies.

Mathews said the players are likely to be interested in the upcoming auctions if there is adequate spectrum and the price is right.

TRAI chairman R S Sharma said the regulator had already given its views to the government on spectrum pricing and the ball is now in government's court.

"The train has already left the station...it's for the government to take a decision now," Sharma said at a panel discussion when an audience member asked about the regulator's stance on spectrum pricing.

Bharti Enterprises Vice Chairman Rakesh Bharti Mittal said that current reserve price is seven times higher than the global peers. When we look at the entire ecosystem that needs to be built, user cases for 5G technology needs to be built.

"This high price coupled with more capex deployment on sites and fibre is going to take a toll on telecom sector," Mittal said.

Reliance Jio also pointed out that there needs to be a clear roadmap for timely availability of spectrum and emphasised that prices of 5G radiowaves need to be "critically looked at".

Reliance Jio Infocomm board member Mahendra Nahata said "long delays" between the spectrum auctions should end. While highlighting the importance of telecom sector in building a new digital India, Vodafone Idea Chairman Kumar Mangalam Birla urged the government to ensure an "enabling regulatory environment".

"While we stand committed to support the growth of the industry, we seek enabling regulatory environment to ensure that necessary investments are made," Birla - who is also the chairman of Aditya Birla group - said.

Notably, Prasad also made a special mention of crisis ridden BSNL and MTNL saying these state-run entities had played an important role in taking telecom services to remote areas and ensuring connectivity during calamities.

"Let me emphasise, I will do my best but you also have to do your best in being tech-savvy and satisfying customers' requirements," the minister said.