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Indian telco's participation in 5G spectrum auction may be subdued despite low reserve prices, says Ind-Ra

August 07, 2018

According to India Ratings and Research (Ind-Ra), Indian telcos may have limited participation in the upcoming 5G spectrum auctions despite the recommended low reserve prices. This is primarily due to high leverage levels and existing capital expenditure priorities.

In addition, Ind-Ra stated that the immature ecosystem for 5G does not make a strong case for spectrum purchase. Moreover, an operator’s ability to re-farm existing spectrum holdings to 5G from 2G, 3G and 4G would also determine 5G spectrum’s supply and demand.

Further, 7,462MHz of the total spectrum has been recommended to be put on the block in the auction, which is 3.2 times of the supply offered for the auction in October 2016. This proposed spectrum is more than the total spectrum held by the industry.

According to the Telecom Regulatory Authority of India (TRAI), the spectrum auction should be postponed to 2019 when the 5G technology is likely to be launched. The TRAI has recommended that the reserve price of 700MHz band be equal to two times of the reserve price of 1800MHz spectrum band which is 42 per cent lower than the price for the earlier auction.

Finally, for pricing of the bands, TRAI has relied upon market discovered prices of a comparable spectrum band.


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