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DoT plans to be ready for 5G spectrum auction by August next year

New Delhi: The department of telecommunications (DoT) has set for itself an ambitious target of completing the procedure for auctioning 5G spectrum by August next year.

Speaking on the sidelines of a workshop done with states and union territories, Telecom Secretary Aruna Sundararajan said on Monday: “We expect to complete due process by July-August 2019. I cannot say whether spectrum auction will happen by then, but we will be ready after the second half of 2020.” It did not mean the whole country would be in 5G but it would be available in certain pockets, she said.

The DoT secretary added while the Telecom Regulatory Authority of India had given preliminary recommendations on the proposed auction, the working committee at the DoT was looking at the details. A separate task force on 5G has given a broader set of (spectrum) bands they can work on.

Telcos, however, say the target is ambitious, considering the fact that the industry is reeling from a debt of Rs 7.6 trillion on average gross revenues of only Rs 2.5 trillion and an Ebidta (earnings before interest, depreciation, taxation and amortisartion) margin of 20-22 per cent.

The telcos have to fork out Rs 245 billion next year as deferred payment for spectrum, which they bought earlier and which is equivalent to their entire EBITDA. That apart, they are investing $8-10 billion (Rs 576 billion to Rs 720 billion) in expanding their networks as well as partly paying for spectrum. Rajan Mathews, director general of the Cellular Operators Association of India, said: “As there is no shortage of spectrum anymore and especially in 5G, you can put them under auction every year, but considering the financial situation, I don’t think anyone will be bidding for 5G, especially at the high price recommended by Trai.”

Mathews said there might be some demand from telcos for 4G spectrum in the 2300 band.

Vodafone-Idea, which has a huge debt overhang, has told the DoT not to hold auction till 2020, when the eco system for 5G gets evolved.

Telcos say they do not expect the price war, unleashed in the market with the coming of Jio, to ease in the next one to two years, and hence they hardy have any money for 5G. That is primarily because Jio is looking at grabbing a 40 per cent revenue share of the market, which is still a long road to go. “In a situation as we are, the focus for us will be to maintain our revenue share and invest in the network to ensure that customers stay with us, not 5G,” said a senior executive of a leading incumbent telco. Also business-to-business applications, which would be required to power 5G, which will offer speeds 100 times faster than 4G, have to be developed and made commercially viable for a business case to justify investment.

Jio has demonstrated applications on 5G (like facial recognition systems and robotic surgery) and also point out that their network is 5G-ready. Equipment makers like Huawei are gearing up for field trials in the first quarter of 2019 and the DoT has invited it, along with Ericsson and Nokia, to do so.

Trai had earlier recommended the auction of spectrum, which included 5G spectrum, at an estimated base price of over Rs 4.94 trillion. As much as 6000 Mhz of spectrum will be available in 5G, which includes both lower as well as higher bands.