Spectrum Auction Might Increase Debt Of Telecom Industry: ICRA


The Department Of Telecommunication is likely to hold spectrum auction in October this year. It is expected to get Rs. 3 lakh crore from the auction. However, there will be no auction of 3,300 and 3,600 MHz spectrum band due to its high price. This means that the government will only sell 4G airwaves.

Spectrum Auction Might Increase Debt Of Telecom Industry: ICRA


But, a new report by research firm ICRA states that it will increase the debt of the telecom industry. It said that the average revenue per user and spectrum auction would increase debt to Rs. 4,60,000 crore, despite the fact that the telecom operators have raised tariffs. The research firm also believes that there the government will only get Rs. 55,000 - 60,000 crore.

"The newer bands, which are expected to be used for 5G - 700 MHz and 3300-3600 MHz bands contribute more than 60 percent of the total value of spectrum to be put to auctions. While 3300-2600 MHz band is likely to be kept out of these auctions," Ankit Jain, Assistant Vice President, Corporate Ratings, ICRA said. Adding to that, "We foresee minimal participation in the 700 MHz band and expect relatively better participation in the 800 MHz and 1800 MHz bands, that beholds significant expiries for incumbents in 2021; and thus the telcos will acquire for a continuation of 4G services."

Meanwhile, the DOT has relaxed norms for license fees, and now operators can pay in 16 installments as against eight installments earlier.

No 5G (3,300- 3,600 Mhz Bands) Auction This Year

The government said no to 5G airwaves in 2020 as operators are not interested in buying the airwaves. However, the operators are keen to buy 4G airwaves as there is a need for additional spectrum.

In addition, the operators want to buy additional spectrum 4G airwaves in the coming auction as sources close to the development said. The demand for data has been increased by many folds. Apart from that, it seems that the upcoming auction will help operators to renew their expired license in several bands.

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