5G spectrum auction gets Cabinet greenlight as services to roll out soon

India, which has among the lowest telecom costs in the world, has seen intense competition in the telecom space over the past several years, leading to consolidation.

Meanwhile, the government is looking to develop domestic 5G technology and has incentivised activity in the sector through production-linked incentives for manufacturing of mobile handsets, telecom equipment and semiconductors, which is expected to aid 5G launch. Prime Minister Narendra Modi has said India will launch 6G services by the end of the decade.

At the upcoming 5G auction, the companies will benefit from the reforms announced in September 2021 including zero spectrum usage charges. Further, the requirement of submitting a financial bank guarantee equivalent to one annual instalment has also been done away with.

However, the base prices for spectrum could be an issue for some operators who had sought lower prices.

The cabinet has approved 5G auctions at reserve prices recommended by the Telecom Regulatory Authority of India. TRAI had in April recommended a 39 percent reduction in the reserve price for the sale of 5G spectrum for mobile services. Some operators had suggested a steeper cut.

For the 5G airwaves, successful bidders will not have to pay upfront. Instead, payments for spectrum can be made in 20 equal annual instalments in advance at the beginning of each year, the government said.

Companies also have the option of paying full or part upfront payment of the bid amount within 10 days of declaration of final price. Those opting for payment of 20 equal annual instalments shall attract an interest rate of 7.2 percent, the government said.

Moreover, the bidders can surrender the spectrum after 10 years with no future liabilities with respect to balance instalments, it added.

The Department of Telecom on June 15 issued a notice inviting applications.

Telecom Regulatory Authority of India had in April recommended a 39 percent reduction in the reserve price for the sale of 5G spectrum for mobile services.

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