5G spectrum auctions to end by July, services likely to begin by Sept
India is going to get 5G services very soon. The Union Cabinet has approved the modalities for holding 5G spectrum auctions, and 72097.85 MHz of radio waves will be put on the block by July-end, an official release said on Wednesday.
The process is likely to conclude by July-end and the rollout is expected by September this year, union Telecom and IT Minister Ashwini Vaishnaw said on Wednesday.
The Cabinet, chaired by Prime Minister Narendra Modi, also decided to enable the development and setting up of ‘Private Captive Networks’ to spur a wave of innovation in new-age industry applications such as machine-to-machine communications, Internet of Things (IoT), Artificial Intelligence (AI) across automotive, healthcare, agriculture, energy, and other sectors.
The Cabinet claimed that the 5G network will provide speed and capacity that would be about 10 times higher than what is possible through the current 4G services. A total of 72097.85 MHz of spectrum with a validity period of 20 years will be put to auction to be held by the end of July, 2022.
The auction will be held for spectrum in various Low (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz), Mid (3300 MHz) and High (26 GHz) frequency bands.
Continuing the pace of telecom sector reforms, the Cabinet announced various progressive options with regard to the spectrum auction, for facilitating ease of doing
business. “For the first time ever, there is no mandatory requirement to make upfront payment by the successful bidders. Payments for spectrum can be made in 20 equal annual instalments to be paid in advance at the beginning of each year,” it said, adding this is expected to significantly ease cash flow requirements and lower the cost of doing business in this sector. The bidders would be given an option to surrender the spectrum after 10 years with no future liabilities with respect to balance instalments.
“The availability of sufficient backhaul spectrum is also necessary to enable the roll-out of 5G services. To meet the backhaul demand, the Cabinet has decided to provisionally allot 2 carriers of 250 MHz each in E-band to the Telecom Service Providers,” it said.
The telecom industry is expected to shell out around Rs 1-1.1 lakh crore on the 5G auction, despite telcos’ reservations over high spectrum prices, Icra said on Wednesday but cautioned that sector debt level is likely to rise with upcoming auctions.
The auction of over 72 GHz of the spectrum is set to commence on July 26, 2022.
According to Icra, given the relaxed payment terms for the auction, the upfront outgo is likely to be around Rs 10,000 crore for the industry.
It said industry ARPU (Average Revenue Per User) is expected to increase to Rs 170 by the end of FY2023, driven by tariff hikes and consistent up-gradation of subscribers.
“While telecom operators consider reserve prices to be very high, nonetheless Icra expects telcos to buy spectrum worth around Rs 1-1.1 lakh crore in these auctions, which will be primarily towards developing 5G capabilities but also plugging other gaps,” it said in a statement.
While the upfront payment may remain low as Trai has recommended an elongated payment plan, the total debt on the industry is likely to increase, which is expected to keep the debt metrics subdued, the rating agency explained.
Icra’s comments come in the wake of the Cabinet approval for the auction of airwaves capable of offering fifth-generation or 5G telecom services, including ultra-high-speed internet.