Spectrum price reform in the works: Telecom minister Ravi Shankar Prasad

Telecom operators, battling financial stress, have for long voiced their protest against high base price of 5G spectrum

Inaugurating the annual India Mobile Congress on Monday, Telecom Minister Ravi Shankar Prasad said the Centre was considering “pricing reforms in the sector”, possibly hinting at making the upcoming spectrum auction, especially in the 5G band, more attractive to the industry. Telecom operators, battling financial stress, have for long voiced their protest against the high base price of 5G spectrum. Most telcos are planning not to bid for 5G unless the government reviews the price.

The three-day telecom summit, which got off to a slow start, was marked by the absence of industry majors including Bharti’s Sunil Mittal and Reliance’s Mukesh Ambani. The two business rivals had shared the dais at the event last year and had turned heads with their contrasting comments on the telecom sector.  

Prasad, while addressing stakeholders, said the government was in the process of taking reform steps in spectrum pricing as well, cheering the industry. Signalling a need for change, Vodafone Idea Chairman Kumar Mangalam Birla said, “We seek an enabling regulatory environment so that we can make the necessary investment in this sector.”

Bharti Enterprises Co-Vice Chairman and Managing Director Rakesh Bharti Mittal pointed out that the industry wanted spectrum at the right price. “We need large quantities of spectrum at the right price as the prices set by Trai (Telecom Regulatory Authortiy of India) are seven times higher than the global prices,” Mittal said.

Mahendra Nahata, director on board of Reliance Jio, also urged the government to review the 5G prices. 

Trai had recommended a pan-Indian base price of Rs 492 crore per MHz for 5G radiowaves. The regulator however reduced the reserve price of the premium 700 MHz spectrum, which had gone unsold in the 2016 auctions, by more than 40 per cent to Rs 6,568 crore per MHz from Rs 11,485 crore. 

Consultancy firm KPMG, in its report, said with the total levy 29-32 per cent in the form of GST, licence fee and spectrum usage charge (SUC), there is a clear need for levy rationalisation. Further declaration of a three-year moratorium on spectrum payments to the government with abeyance on interest charge, refund of accumulated unutilised input tax of $4.24 billion are some of the other demands of the debt-laden sector. The government could also consider doing away with the levy of GST on government payments such as licence fees and SUC.

Airtel, for instance, sought relief in the form of reduced spectrum usage charges, licence fees and slashing of customs duty on equipment. On the whole, Mittal said the government should bring down the cost of doing business in the country to create a conducive regulatory environment.

Recently, a team of top executives from Vodafone Idea had met senior government officials with similar demands.