COAI Says Appetite for Telecom Spectrum Will Only Be Felt in Early 2019

Appetite for spectrum is likely to be felt only by late next year or early 2019 as telecom operators are taking stock of their holdings amid ongoing consolidation, cellular industry body COAI said on Monday.

Telecom regulator TRAI on Monday began the process of consultation for next round of spectrum auction across nine bands which include 60 percent of the unsold radiowaves in last auction and 275 megahertz from two new 5G bands.

It has also sought fresh views on valuation methodology for the prized 700MHz, a band that found no takers in the last auction given the reserve or base price of Rs. 11,485 crores per MHz in 2016.

COAI Director General Rajan Mathews told PTI that having a clear roadmap for spectrum auction is important but the larger question is around when the auctions will actually happen and how the entire strategy syncs with the new telecom policy being drafted by the Department of Telecom.

"If TRAI wants to start the consultation process, there is no harm... The question is when will the auction actually happen and how the pricing and modalities fit with the new telecom policy," he said.

The sector is undergoing massive consolidation and there are issues around "rationalising and normalising" of spectrum holdings as two telcos merge, he pointed out.

"It is premature for them (companies) to go and buy spectrum given the ongoing consolidation. I think, the appetite for spectrum will be felt in later part of 2018 or beginning of 2019," Mathews said.

In its consultation paper issued on Monday, TRAI has asked as to when the next round of auction should be held and whether it should be held in a "phased manner", that is, auction for some of the bands be held now and for other bands later.

TRAI noted that the telecom industry is undergoing consolidation phase as some of telecom service providers have filed merger of their companies/licences while a few licensees have traded their entire spectrum holding and closed their services.

"DoT...has indicated that about Rs. 3.08 lakh crores is due over the next 11 years on account of deferred payment plans opted by telcos for the purchase of spectrum rights in the recent auctions," TRAI said.

Noting DoT's views that the telecom industry owes about Rs. 4.60 lakh crores to various financial institutions and banks, TRAI said that due to hyper competition, concerns have been expressed about the financial health of the sector, revenue growth and the capability of the companies to meet their contractual commitments.