To give relief to telecom players in a bid to implement 5G technology at an early date, the Indian Telecom Ministry has planned to cut the price of the 5G spectrum.
Sources said that the Telecom Commission - the apex body dealing with telecom sector issues - will discuss the proposal prepared by India’s Ministry of Telecommunications, in which the price of spectrum is proposed to be cut by 50 percent. Last year, the Telecom Regulatory Authority of India (TRAI) set $70 million a unit as the base rate for 5G airwaves, and mandated that any telcos will have to buy at least a block of 20 units.
“Telecom Commission will discuss and expect to give nod to the proposal later this month”, official sources said on Friday.
The important steps have been moved by the ministry following serious concerns raised by telecom firms during the Indian Mobile Congress that was held in New Delhi last month.
Telecom chiefs had underlined the need for an “enabling regulatory environment” to ensure that phone companies have the “necessary wherewithal to make commensurate investments to stay at the cutting edge of technology”.
India’s biggest telecom firm Bharati Airtel’s Vice Chairman Rakesh Bharti Mittal highlighted the “seven times higher price of 5G in India than global peers” in front of India’s Telecom Minister Ravi Shankar Prasad.
Backing his competitors, Reliance Jio Director Mahendra Nahata warned that “higher floor rates would lead to 5G networks becoming unviable and getting delayed”.
Sensing the distress of the telecom firms, which are under severe financial distress due to a debt of over $57 billion, the Indian telecom minister assured them last month that the price would be set as per the market very soon.
“Spectrum auctions will happen within this financial year and we are also working on the pricing of spectrum. We are in the process of reforms for spectrum pricing, so wait for some time”, Prasad said during the Indian Mobile Congress in October.
Rating agency India-Rating said in its recent report that telecom operators will remain under pressure in the medium term due to intense competition, elevated debt levels, and continued reliance on capital infusion for debt servicing and capital expenditure. The aggregate gross debt of India's telecom firms Voda-Idea, Bharti Airtel (India business), and RJio at the end of financial year 2019 stood at $57 billion.
Considering the huge debts and operational costs in the Indian market, Chinese tech giant Huawei Technologies has also asked the Indian government to cut the cost of spectrum to catch the opportunity in the interest of the next generation. The 5G network is critical for mobile devices, new applications like driverless cars, and artificial intelligence (AI), as well as military tech.