Divergent views emerge from Indian telcos on 4G spectrum auction

4G spectrum auction
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Divergent views have emerged from Indian telecom operators on the timing of the 4G spectrum auction with only Reliance Jio appearing to be pushing hard for bidding to take place at the earliest.

Bharti Airtel and Vodafone Idea want the auction to take place only in 2021, according to a report by the Economic Times. Both telcos are financially weaker and have been impacted by the adjusted gross revenue (AGR) litigation.

Spectrum licenses across bands are expiring in 2021 for all three telecom operators.

Jio’s spectrum permits in the 800 MHz band are expiring next year in 12 circles. It also uses Reliance Communications’ spectrum in the 800 MHz band in 14 circles, which will also expire in July 2021. Both the companies have a spectrum trading agreement.

Airtel and Vodafone Idea’s spectrum in 1800 Mhz band is also expiring in 2021 in eight circles each.

The report said that while both Airtel and Vodafone Idea have backup spectrum available and licenses that are expiring carry lesser quantities of spectrum. This is the main reason why these telcos want the Indian government to defer 4G auction.

India’s Department of Telecommunication previously said that it will sell spectrum in the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands as part of the 4G auctions.

India’s Cabinet has yet to float a note on spectrum auction. The process is delayed due to the nationwide lockdown and the AGR issue, which ended in September after the Supreme Court allowed telcos like Airtel and Vodafone Idea to clear outstanding AGR dues over a period of 10 years.

Some media reports previously said that the auction may be held in December 2020.

India has already deferred 5G spectrum auction to sometime in 2021 due to the financial health of Vodafone Idea and Bharti Airtel, and an underdeveloped local ecosystem around the 5G technology. 

India has earmarked spectrum in the 3,300-3,600 MHz band or the mid-band for the next-generation 5G service.

The Cellular Operators Association of India (COAI), the industry body which represents all three private telcos, said that Airtel and Vodafone Idea feel that financial stability has to come first before the next round of auctions.

“If you do not have money, buying capability will be different. AGR dues have a big financial impact… that no one can deny,” SP Kochhar, director general of COAI was quoted as saying. “Some of them (telcos) feel that financial stability has to come first…another view is we need spectrum immediately.”

Vodafone Idea, in its recent annual report, revealed that it holds 1,724 MHz of liberalised spectrum. Airtel and Jio have 1,536 MHz and 1,108 MHz of liberalised airwaves, respectively.

Analysts said that Jio wants the auction to happen immediately because it has an aggressive target to increase its subscriber base, and in case of unavailability of spectrum or expired license, it may see service disruption which will also impact subscriber growth.

Jio, for instance, was the only telecom operator which added nearly 4.5 million mobile subscribers in June 2020, taking its subscriber base to over 397 million. Airtel and Vodafone Idea, on the other hand, lost 1.12 million and 4.82 million customers, respectively. 

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