Bharti Airtel CEO Gopal Vittal reiterates call for affordable spectrum

Bharti Airtel CEO Gopal Vittal on Thursday once again said that spectrum prices should be affordable so that operators can invest in building networks and not just spend on buying airwaves.

Speaking at the Global R&D Summit 2020 organised by industry body Ficci, Vittal said one of the most critical enablers for Digital India is improved access to digital infrastructure. He said operators needed “…affordable and easy access to right of way so that we can lay out fibre when needed, affordable spectrum so that we can invest in building networks rather than spend money on just airwaves”.

Apart from improved access to digital infrastructure, there should be stable and long-term policies to encourage more investments with fewer risks, he said.

Airtel had earlier said that the current reserve price for spectrum, especially 5G, is too high and unaffordable for it to buy airwaves. The department of telecommunications has not proposed any reduction in reserve prices for spectrum auction, which is likely to take place sometime during the January-March period. As a result, it is the Union Cabinet which will decide whether prices should be reduced or not, sources said.

According to industry observers, the high reserve price for spectrum is likely to be a dampener as operators will find it hard to raise that much money. Due to the precarious financial condition of telcos, last November the government had announced a moratorium of two years on instalment payments for past auctions.

In August 2018, the Telecom Regulatory Authority of India (Trai) had recommended reserve prices for the next round of auctions, which were considerably lower than what was fixed for the 2016 auctions, but were still seen on the higher end given the industry’s financial position.

As 5G auctions are not on the cards next year, the Cabinet may not decide on final pricing at this point of time. It is the premium 4G spectrum where pricing matters. While the Trai had reduced this reserve price by 43% compared to 2016 auctions to Rs 6,568 crore per MHz, operators will have to shell out Rs 32,840 crore for a pan-India 5 MHz block.

In the 2016 auctions, the government had mopped up a total Rs 65,789 crore, 4% over the reserve price, from the country’s six operators who participated in the bidding. However, the response had been lukewarm, as only 965 MHz spectrum or 40% of the total 2,353 MHz available was sold.