ICRA on Tuesday said that India’s telecom industry is not prepared for spectrum auction of a larger scale at least for one year as the ongoing structural changes will continue to absorb the bandwidth of the telecom operators for some time.
The agency said that the entry of a new operator led to a bruising price competition amongst the telcos, and a stable pricing regime is still some time away. New pricing plans and products (such as 4G-enabled smartphones) are keeping the industry dynamic. In addition, many important and sizeable merger transactions are under process which will materially alter the industry structure.
At a time when there are talks to provide some incentives to the industry, which is ailing with pressure on profitability, high repayment burden of elevated debt levels, and high capex requirements, a mega spectrum auction definitely appears counter-intuitive, ICRA said.
Lack of industry preparedness impacting the spectrum auction participation has been evidenced in the past as well. Till now, the telecom industry in India has witnessed six rounds of auctions.
The Telecom Regulatory Authority of India (TRAI) on Monday released a consultation paper on a mega auction of spectrum in various bands, inviting opinion on issues like timing of next spectrum auction, quantum of spectrum to be put to auction, reserve prices for the spectrum, block sizes in various bands, and roll-out obligations. TRAI has proposed new bands for auction – 3300-3400 MHz and 3400-3600 MHz.
For the proposed auctions, TRAI has included the unsold portion of the previous auctions along with inclusion of two new bands i.e. 3300-3400 MHz and 3400-3600 MHz. These bands are academically suited for 5G services, wherein deployment across the world is limited. In India, requirement of this spectrum is some time away, especially when seen in light of the fact that spectrum in the 2300 MHz band, auctioned in 2010 has not been fully deployed, ICRA informed.
As of now, the operators in India hold 4345 MHz of spectrum across six bands. The industry appears adequately stocked with spectrum and would look to commit its resources towards deploying the spectrum already acquired instead of buying more, ICRA added.
By Baishakhi Dutta
