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Trai recommendations on cut in spectrum prices lower than industry’s demand, say Analysts

The 700MHz band could likely see demand by telcos.

Agencies | Updated on: Tuesday, April 12, 2022, 09:38 PM IST

Credit Suisse in its note said recommendations are ''incrementally positive'' and that Jio and Airtel are well placed to participate in the auction. / Representative image |
Credit Suisse in its note said recommendations are ''incrementally positive'' and that Jio and Airtel are well placed to participate in the auction. / Representative image |
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Trai recommendations on cut in 5G spectrum base price are incrementally positive, not transformational, some sector analysts said, while others felt that bidding intensity could be moderate or muted in the upcoming auction.

The reduction proposed in pricing, though largely on expected lines, is not in sync with the 90 percent drop that the industry had been asking for, the experts said.

Credit Suisse in its note said recommendations are ''incrementally positive'' and that Jio and Airtel are well placed to participate in the auction.

''Trai recommends 25-50 percent reduction in spectrum pricing; incrementally positive but nothing transformational,'' Credit Suisse said.

The 700MHz band could likely see demand by telcos, it added.

''Also, while the price for 3.4 GHz 5G spectrum was reduced by 36 percent, it was lesser than the telco's demand for about 90 percent reduction. Also, the price for mmWave spectrum has been set at 2.2 percent of the price of 3.4 GHz spectrum versus telco's demand for about 1 percent,'' it said.

Emkay Global noted that the reduction proposed in key bands of 3300-3670 MHz and 700 MHz bands, but went on to say that: ''Although the reduction is largely on expected lines, it is lower than the industry's demand of about 90 percent cut''.

In its report, ICICI Securities said spectrum prices for 700MHz have seen a steeper cut of 58 percent (on a comparable basis) ''but remain expensive''.

''Spectrum supply remains adequate to easily accommodate three players for C-band and thus, we expect bidding intensity to remain muted in the upcoming auction,'' ICICI Securities said.

The Telecom Regulatory Authority of India (Trai) on Monday recommended about a 39 percent reduction in the reserve or floor price for the sale of spectrum for mobile services, including the latest 5G offering, as it looked to match revenue expectations with the industry's paying capacity.

With large swathes of spectrum remaining unsold in the last two auctions, Trai recommended to the government for selling airwaves in all existing bands of 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, and new slots of 600 MHz, 3300-3670 MHz and 24.25-28.5 GHz.

It has suggested a lower reserve price for all bands, compared to the prices proposed in the previous recommendations in 2018.

In a 20-year scenario, the floor price in the 700 MHz band has been cut by 40 percent to Rs 3,927 crore per MHz for a pan-India spectrum, while the same in 800 MHz has been lowered by 22 percent to Rs 3,620 crore per MHz, pan-India.

For the prime 5G frequency of 3300-3670 MHz band, the all-India reserve price adds up to Rs 317 crore per MHz, which is over 35 percent lower than the Rs 492 crore/MHz suggested by Trai last time around.

All in all, Trai mooted nearly 39 percent lower base price across all bands referred to it compared to the last time.

(With inputs from PTI)

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Published on: Tuesday, April 12, 2022, 09:38 PM IST