Your browser is not supported. Please update it.

8 October 2019

Indian operators in stand-off with regulator over 5G auction date

The Indian regulator, TRAI, remains determined to hold a 5G-focused auction in the 3.3-3.6 GHz band before the end of the year, but the three main operators – Bharti Airtel, Reliance Jio and Vodafone Idea – are calling for a delay and for lower reserve prices. If the government, and TRAI, continue with their planned dates and prices, the auction will be unaffordable, say the operators.

TRAI has recommended a reserve price of INR4.92bn ($71m) per unit for the 3.3-3.6 GHz band, the centrepiece of a multiband auction which would offer a total of 8,294 MHz of spectrum. This would make it one of the biggest auctions ever held, and Indian MNOs certainly need more airwaves to keep up with burgeoning demand for data in this low-ARPU market. But the high prices are challenging, especially for Bharti Airtel and Vodafone Idea, which have significant debt burdens, have lost market share and ARPU because of Jio’s entry, and have the costs of recent acquisitions and upcoming 5G network build-out to bear too. Jio’s debt is about the same as Airtel’s – almost $16bn – but at least it is profitable.

“Current reserve price of 5G spectrum is too high – approximately 5-6 times higher than other countries and needs urgent revision. The unsold mobile spectrum has cost India INR5400bn ($75.9bn) in economic loss since 2010. Forty percent of spectrum since the 2010 auctions has remained unsold,” said TV Ramachandran, president of Broadband India Forum, in a statement.

Last month, Bharti Airtel’s CEO Gopal Vital said each Indian MNO would need 1,000 MHz of midband 5G spectrum to “do 5G properly”. He said: “There is a lot of work to be done freeing up mmWave spectrum in the high bands. Even when you talk about spectrum in the midband, the 3.5 GHz spectrum, every operator is going to need 75-100 MHz of spectrum, otherwise you will see a 5G icon displayed on your phone, but in reality you will just be getting a 4G experience.”

Operators also say that they still have capacity and capability to leverage in their 4G networks, and that they have not yet identified new applications and revenue streams which really require 5G at this stage. But the government has set a target of rolling out 5G in the same timeframe as other leading economies – and the operators hope it will come to the realization that this ambition is incompatible with the Treasury’s desire to generate a windfall from spectrum sale, as it has done in the past.

Even Huawei’s deputy chairman, Ken Hu, as weighed in on the debate, telling journalists at an event in Shanghai recently: “India is an extremely important market for Huawei in the Asia-Pacific region. In terms of our expectations of what we hope to hear from the Indian government, we would like to see more spectral resources being made available. We need to see cheaper spectrum resources being released to the Indian carriers. We hope that spectrum resources can be allocated more efficiently. It’s very important to have contiguous resources released to carriers in India.”