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Why is Telecom Companies May Skip 5G Spectrum Auction

5G spectrum

Telecom companies policy

Telecom Companies could skip the upcoming 5G spectrum sale if the pricing of airwaves is “too high”, global rating agency Fitch said on Friday.

Fitch said that while the new telecom companies policy — National Digital Communications Policy 2018 — is likely to encourage companies to increase investments in the 5G spectrum, it could further “stretch their already heavily indebted balance sheets over the next two years, depending on 5G spectrum asset price”.

What more did Fitch say about the 5G spectrum auction

telecom companies policy

Intense competition

Fitch said, has limited telcos’ pricing power, and led to stretched balance sheets.

The rating agency, however, expects price competition to ease in the medium-term, following the emergence of three large telcos — Vodafone Idea, Airtel and Reliance Jio — which have an estimated combined revenue market share (RMS) of over 90%.

Last week, telecom secretary Aruna Sundararajan had said the 5G spectrum sale is likely in the latter half of 2019.

Benefits Of Vodafone Idea, Airtel and Jio

Fitch also expects new telecom companies policy to benefit Vodafone Idea, Airtel and Jio, as it “encourages more efficient spectrum usage” by making available harmonized and contiguous spectrum bands and “further liberalizing spectrum sharing and trading”.

Spectrum Auction

“Accelerated 5G deployment, increased spectrum supply, and harmonization would help telcos keep up with growth in data usage,” Fitch said.

Approved the new telecom policy

Earlier this week, the Cabinet approved the new telecom policy. Which aims to create four million jobs, draw $100-billion worth of investments into the industry by 2022. And boost the sector’s contribution to 8% of GDP from 6% in 2017, besides backing the principles of net neutrality.

Telecom minister Manoj Sinha Said

Telecom minister Manoj Sinha had said NDCP-2018 would give a thrust to the telecom sector. And ensure the financially stressed industry is not merely treated as a revenue generator. But one that can provide immense socio-economic impetus to the economy.

Telecom Companies

Fitch Said

In this context, Fitch said the new policy could benefit the telecom industry by making. It was easier to meet rapidly rising data demand and addressing tax and fee burdens on the industry. Telcos’ costs and red tape, it said, could be cut, given the new telecom policy’s plans to “review and rationalize”. The sector’s tax structure and optimize future spectrum asset pricing.

telecom companies policy

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