Industry

DoT to get ₹13,500 crore as first 5G bid payment from telcos


The Department of Telecommunications (DoT) will garner around ₹13,500 crore in the next 10 days from telcos as the first instalments for the spectrum bought in the recently concluded 5G auction, a senior government official said.

As per DoT’s calculations, Reliance Jio‘s first instalment will be ₹7,838 crore,

‘s will be ₹3,834 crore, and ‘s first tranche will be about ₹1,673 crore. New entrant Adani Data Networks is expected to pay its entire bid amount of ₹212 crore.

Market leader Jio was the largest bidder in the 5G airwave auctions which ended on Monday, spending ₹88,078 crore, while Airtel and Vodafone Idea bought airwaves worth ₹43,084 crore and ₹18,799 crore, respectively.

Telcos have the options of either paying up in 20 equal annual instalments or making a greater upfront payment followed by annual instalments.

“It’s up to them. We expect the minimum payment as per our calculations. If someone’s cost of borrowing is lower, they may like to pay up front. Our cost of discounting (interest rate for deferred payments) is 7.2%, so the operators will make an economic choice,” telecom secretary K Rajaraman said.

‘Tariff Hike a Mkt Decision’

Another official, however, said DOT doesn’t anticipate a larger upfront payment than what is necessary, as the current cost of borrowing is high.

Rajaraman said once the DOT receives payment, it will immediately allocate frequencies to the mobile operators. Currently, the DoT is carrying out a spectrum harmonisation (reorganisation) exercise to provide continuous airwaves to enable better services. This will be completed by the time payments are made, the secretary said.

The government netted ₹150,173 crore from the sale of 51,236 MHz in the seven day auction, which ended Monday. In all, it had put 72,098 MHz airwaves on sale.

5g

The government expects 5G services to be rolled out gradually from September-October with pan India coverage to be completed in two-three years, backed by investments of around ₹2-3 lakh crore. Initially, 5G networks are likely to be launched in metros and category A circles that have high paying power, followed by smaller cities and towns.

Responding to a question on whether the government will intervene if mobile tariffs increase in the 5G era, Rajaraman said prices have been under forbearance and will continue to be so. “It’s a market decision,” he said.

E BAND REVIEW

The telecom department will send a reference to Telecom Regulatory Authority of India (Trai) in the next seven days or so, asking the regulator to review its 2014 recommendation of allocating the E-band (in 71-76 GHz and 81-86 GHz ranges) spectrum without auctions. DoT has not accepted these recommendations and is of the view that this band should be auctioned.

“Now a lot of things have changed. Technology itself has changed a lot and this spectrum is capable of various uses, including satellite and terrestrial — both access and backhaul. With regard to this, Trai has to re-examine its earlier recommendations,” Rajaraman said.

He added that DoT will seek fresh recommendations from Trai on the allocation methodology for the E band. Typically in India, spectrum used for access, or retail, services, is auctioned while those used for backhaul is administratively allocated.

Further, the DoT will again approach TRAI to seek its recommendations for the millimeter wave band spectrum in 27.5 to 28.5 GHz.

The regulator had recommended mixed use for the band, meaning satellite players as well as telecom operators can utilise it. “Since it was mixed use, we will refer it back to Trai so that a proper decision could be taken,” Rajaraman said.



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