India drops SUC for 5G spectrum that could cut annual opex by 50%

5G India SUC Vodafone Idea
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The Indian government aims to take the sting out its coming high-priced 5G spectrum auction by abolishing the spectrum usage charge (SUC), which it says will reduce annual payments by telcos to the government by 40-50%.

The government said that ‘zero SUC’ on spectrum acquired in the upcoming auction will provide a significant relief to telcos in terms of the operating costs of telecom networks.

The SUC paid by operators currently varies between 3-5% of Adjusted Gross Revenue (AGR) depending on the year of acquisition. Experts said that zero SUC will enable a faster 5G rollout in the country.

“This is over and above the 39% reduction that TRAI had recommended over the 2018 prices and this should give relief to telcos,” a government official was quoted as saying by the Economic Times.

For instance, if a telco acquires 100 MHz spectrum in the mid band for Rs 32,000 crore and another 1 Ghz in the millimeter wave (26 GHz) band for Rs 8,000 crore, then the total price of spectrum bought becomes Rs 40,000 crore.

“At Net Present Value, the annual outgo for a telco on this spectrum would be Rs 3,300 but with zero SUC, the payment would perhaps reduce by as much as 50%,” the official explained to the publication.

The official quoted above also revealed that the Department of Telecommunications (DoT) will send a reference to the regulator TRAI, to finalise the modalities such as auctioning or allocating spectrum to private enterprises after identifying bands that could be given. However, no timeframe for this exercise has been revealed as yet.

The Indian Cabinet cleared direct spectrum allocations to corporations and enterprises for setting up captive private 5G networks. In April this year, TRAI recommended that spectrum in the 3700-3800 MHz band, the 4800-4990 MHz band and the 28.5-29.5 MHz band be given directly to private enterprises.

Telecom secretary K Rajaraman Thursday said at an industry event on Thursday that 5G rollout is likely to commence in August once the auctions are conducted in July.

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