India expects to fetch Rs 53,986.72 crore or $7.3 billion in revenue from its telecom sector in the next financial year of FY22 with the help of the upcoming 4G spectrum auction, which will be held in March 2021.
However, revenue from the sector in FY21 at Rs 33,737 crore or $4.56 billion is sharply below the previous estimates by the Indian government at Rs 1,33,027.20 crore or $17.98 billion, the union budget 2021-22 documents revealed on Monday.
Industry watchers said that the Indian government’s earnings from the telecom sector in FY21 impacted the Supreme Court’s adjusted gross revenue (AGR) judgment, which allowed telecom operators 10 years to pay such statutory dues. India had also cleared a two-year moratorium on spectrum payments in 2019, which impacted revenue inflows.
Additionally, the Indian government expected 5G auctions to take place within the current fiscal year, which didn’t happen due to the financial condition of private telecom operators and the insufficient spectrum in the mid-band.
India typically gets telecom-related revenue in the form of spectrum usage charges (SUC) and license fees to offer services. Indian telcos need to pay 8% of their AGR as license fees annually and 4% of AGR as SUC.
India’s Department of Telecommunications (DoT) is expected to garner around Rs 48,000 crore or $6.49 billion from the March auction. However, around a fourth of the estimated sale proceeds from telcos like Reliance Jio, Vodafone Idea and Bharti Airtel could reach the government coffers in the ongoing fiscal ending March 31 as upfront payment.
India will put up 2,250 units of 4G airwaves across seven bands worth Rs 3.92 lakh crore or $52.97 billion at base price. Interestingly, spectrum in the 700MHz band, valued at Rs 2.3 lakh crore or $31.08 billion, went unsold in 2016 auction due to the exorbitant price.
India is now expected to hold a 5G spectrum auction sometime in FY22. While the telecom department hasn’t specified the timing for auctioning 5G spectrum, Indian telecom operators, especially Bharti Airtel and Reliance Jio have said that their networks are 5G-ready and can roll out high-speed services immediately after the auctions.
Last week, Airtel said that it could launch commercial 5G services using the existing 4G spectrum bands. It demonstrated live 5G service on its commercial 4G network in Hyderabad using spectrum in the 1800 MHz band.
Last week, the DoT tweaked the spectrum auction rules, allowing telecom operators to offer new technologies like 5G on their existing spectrum by giving six months’ notice to the authorities.