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Telecom companies reject regulator’s claim on 5G base price

Airtel had suggested that for the spectrum band with market discovered auction price, the same reserve price without any indexation should be adopted.
Mumbai: Telecom operators rejected Telecom Regulatory Authority of India (Trai) chairman RS Sharma's contention that 5G base price was recommended after industry feedback, saying all telcos unanimously had called for lower prices in the 5G band of 3.3-3.6 GHz and the 700 MHz bands.

“There was industry wide consultation and all players had said that the pricing in the significant — 700 MHz, 3.3-3.6 GHz—spectrum was over priced and had suggested alternative price points in our submissions,” Cellular Operators Association of India (COAI) director general Rajan Mathews told ET.

The industry body, which represents private players Vodafone Idea, Reliance Jio and Bharti Airtel, said the members were unanimous in highlighting the fact that spectrum was over priced and needed to be brought down substantially if the prime minister's vision for ‘Digital India’ was to become a reality.

“Further these high prices are contradictory to the Cabinet approved NDCP 2018, which stressed that the industry should not continue to be looked at to extract revenue for the government," Mathews added, highlighting the impact of not paying heed to their pleas.

These comments come on the back of Sharma reiterating that recommendations on pricing of spectrum, including 5G airwaves, had been finalised based on industry feedback, and it is for the individual stakeholders to decide whether to participate in the auction or not.

But the telcos' submissions say otherwise. For instance, Bharti Airtel wanted the value of 700 MHz band kept equal or lower than the price of 800 MHz band spectrum while Reliance Jio wanted the same band's base price to be kept at 50% of the reserve price (RP) in previous auction/estimated value. Vodafone Idea had suggested that Trai look at international benchmarks, financial deterioration and the exits/consolidations in sector whilst revising the valuation for the 700MHz band.

When the regulator had asked if the realised/auction determined prices achieved in the October 2016 auction for various spectrum bands can be taken as the RP in respective spectrum bands for the forthcoming auction, the telcos suggested discounts.

Airtel had suggested that for the spectrum band with market discovered auction price, the same reserve price without any indexation should be adopted. And for band which remained unsold in previous auction, 80% valuation as the RP should be taken. Jio wanted valuation to be revisited according to market realities and RP to be reduced.

On the other hand, Vodafone Idea stressed on discounts ranging from 20% to 50% and reiterated that indexing as a practice should be discontinued.

The tussle between the regulator and operators, weighed by huge debt and facing new adjusted gross revenue dues, over base price has been on since telcos said they cannot buy airwaves at Trai's given prices.
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