Spectrum Auction Only in Late-2018, Early Next Year: COAI

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The next spectrum auction should be held only later this year or early 2019 in view of telecom industry’s weak financials and the still-nascent equipment ecosystem for the prized 700 MHz band, COAI said.

“The timing of the auction should be later part of 2018 or early 2019,” COAI director general Rajan Mathews told.

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“The industry’s ability to take on debt and generate healthy revenue is critical for the auction,” he added.

The comments follow telecom regulator Trai’s announcement that it may start the consultation process for the next round of spectrum auction in about a fortnight.

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The Department of Telecom has sought Trai’s view on spectrum price for various bands including premium radiowaves in 700 MHz band which had remained unsold in the October 2016 auction. DoT has also sought views of Trai on 5G services.

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Trai Chairman RS Sharma said the consultation process and recommendations typically take six months to complete.

The telecom sector has a debt of about Rs 4.6 lakh crore and is facing pressure on revenue and profitability in the wake of competition intensified by the entry of newcomer Reliance Jio.

Given that the pricing of radiowaves will be “critical”, there needs to be better visibility on factors that would go into establishing the reserve price for different spectrum bands, Mathews said.

“By end of 2018, there will be a better visibility on issues like ‘use case’ for 700 MHz, on the readiness of network equipment manufacturers and the entire ecosystem. All these parameters will be important,” Mathews emphasised.

Also, there would be clarity on the extent of 2G usage and whether the “2G spectrum needs to be re-purposed”, he pointed out.

Moreover, the mergers and acquisition (M&A) deals that have been announced so far, are likely to be completed within that time-frame, he argued.

“For price to be decided, all the factors need to be taken into account including the (M&A) scenario,” he said, adding that the companies can then better assess their spectrum needs.

In fact, the association is of the view that pricing of radiowaves itself should be determined closer to the actual timing of the auction.

“There is nothing that stops them (Trai) from saying it is too early to do it right now,” Mathews said.

In the auction held last October, the government managed to sell only 964.80 MHz of spectrum in various frequency bands against 2,354.55 MHz airwaves put on the block.

Even at the end of the five-day auction, nearly 60 per cent of the spectrum had remained unsold, including the expensive 700 MHz band, which found no buyers.

The debt-ridden telecom sector had ignored premium radiowaves in 700 MHz band — put up for sale for the first time last year at a reserve or base price of Rs 11,485 crore per MHz.