NEW DELHI: The Department of Telecommunications’ (DoT) next spectrum auction is likely to to raise only about Rs 40,000 crore —far lower than the Rs 66,000 crore raised in the last sale in 2016 — given the financial condition of the sector and that most operators only need top-up spectrum now. “At best, we feel the auctions will fetch around Rs 40,000 crore. Banks,particularly government banks, are wary of further lending to telcos, given the huge debt already on the balance sheets of telcos,” a senior DoT official, who did not wish to be identified, told ET. “The sector has already undergone consolidation and operators more or less have sufficient capacities. They only need to add on,” the official said, explaining the department’s final views on the telecom regulator’s proposals. The pricing of airwaves needs to be finalised by November 15. The official, however, said the DoT’s internal revenue estimates are based on the premise that the government would reduce spectrum prices proposed by the telecom regulator. 66451800

“Competition is always good for the sector and we know, if we want more competition, we will need to lower the reserve price of spectrum,” the official said, adding that pricing of spectrum needs to keep the financial condition of the telecom sector in mind. This August, Trai had recommended the auction of airwaves across the 4G bands of 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2100 MHz, 2300 MHz and 2500 MHz, besides 5G spectrum in the 3300-3600 MHz bands. The telecom regulator had lowered the starting prices for most bands from those set at the previous sale in October 2016. Specifically, the regulator slashed the base price of the premium 700 MHz band by 43% to Rs 6,568 crore a unit, or Rs 32,840 crore for a block of 5 MHz and set `492 crore per unit as the minimum rate for the next-generation 5G spectrum. But, the industry found even this too steep given the pressures on revenue and profitability, and the weight of the over `7 lakh crore of debt. For example, experts said, Trai’s suggested base price of Rs 492 crore per unit of 5G spectrum was much higher than the Rs 65 crore per unit discovered at a recent 5G auction in Korea. “We think that the price of certain bands of spectrum like, 1800 Mhz, 2300 Mhz and even the 5G spectrum in 3300-3600 Mhz is still on the very high side,” the official said. According to an internal committee of the department looking into the pricing of spectrum, there was scope of at least a further 25% reduction in the pricing of 5G spectrum. The government managed to raise around Rs 66,000 crore by selling 965 MHz of spectrum last time, compared with the 2,354.44 MHz of spectrum, worth roughly Rs 5,63,000 crore that was put on sale. Back then, the telcos did not bid for 700 MHz at all, citing the high base price. “In fact, a section of the department feels that we should make our calculations and reduce the price ourselves instead of sending it back to the regulator for a review, since the regulator has already given its calculation,” the official explained