Fitch expects Trai to cut base prices for 5G spectrum

Global ratings agency Fitch expects the Telecom Regulatory Authority of India (Trai) to cut base prices of coveted airwaves in the 700 MHz and 3.3-3.6 GHz bands when it holds the much-awaited 5G spectrum sale likely next year.

“We expect 5G spectrum is likely to be auctioned in 2022, and for commercial launch in 2023, and we expect the (sector) regulator to reduce the reserve price for future auctions of 700 MHz and 3.3/3.6 GHz bands, which can be used for 5G,” Fitch Ratings said in a media statement on Monday. The Department of Telecommunications (DoT) had set the ball rolling for the next spectrum auction in September by sending a reference to Trai, seeking fresh base prices for the gamut of airwave bands, including 700 MHz, 3.3-3.6 GHz and new ones such as 600 MHz and the precious mmWaves like 26 GHz and 28 GHz that support both 5G mobile and satellite services. Fitch also estimates that Bharti Airtel NSE 0.10 % and Reliance NSE -0.12 % Jio will boost their revenue by around 8%-12% in 2021-22 and also report stable operating margins, propelled by growth in their mobile and fixed broadband businesses. It also estimates that the telecom industry’s monthly average revenue per user (ARPU) will rise 15%-20% year-on-year (from ₹129 in FY21) on the back of likely “headline tariff hikes and growing migration of 2G users to higher-priced 4G plans”.