India's 5G auction likely pushed into next financial year

India’s next 5G spectrum auction is unlikely to happen before the end of the financial year because the regulator is still some way from making any firm decisions on the process.

We are by now used to the preamble to the spectrum allocation process dragging on for longer than expected in India, so the news comes as no great surprise. We were looking ahead to a multi-band frequency auction before the end of March, but according to local press reports, an April or May timeframe now seems more likely.

A PTI report quotes Communications Minister Ashwini Vaishnaw as having shared the information at an event on Thursday. Vaishnaw noted that the Telecom Regulatory Authority of India (TRAI) is still holding consultations into the auction process and soliciting opinions on the subject. As such, it is unlikely to submit its final report until well into the new year.

Vaishnaw’s prediction on when that might happen was somewhat loose. Mid-February appears to be the earliest possible date, but the consultations and so forth could push it to the end of the month or into March, he said, with the auction to follow “immediately” after. Immediately actually means April or even May, Vaishnaw said, noting that the process is complex. It always is.

For the telcos, a couple of extra months probably doesn’t make much difference. Indeed, in this year’s auction in March – which was of course the last financial year – interest was pretty lacklustre, with Reliance Jio picking up most of the spectrum, Bharti Airtel some, and a small amount going to Vodafone Idea, while quite a lot also remained unsold.

The government has introduced the telecoms reform package since then, which includes a number of points on spectrum acquisition and payment, including the removal of spectrum usage charges on newly-acquired airwaves, as well as licence durations.

Those measures, along with the rest of the package, proved a ray of sunshine for India’s troubled telcos, especially Vodafone Idea, whose recent financial struggles have been well documented. It will be interesting to see whether they have an impact on telco behaviour in the upcoming auction, whenever it gets going.

While the telcos might not be in a desperate hurry for another auction, the suggestion that the next one will be in fiscal 2023, rather than sneaking in before the end of the current fiscal year, does have a bearing on the government’s finances. Doubtless it would rather book revenue from the sale on this year’s balance sheet. Even March’s low-key auction raised 778 billion rupees, or around US$10 billion, so we’re not talking small amounts of money.

The money side is one of the key issues still to be ironed out by the TRAI. The lack of interest back in March was in no small part attributable to high reserve prices, and the debate over base prices for this upcoming auction is still raging. And that’s not the only big decision still outstanding. The regulator and the government have yet to establish exactly which spectrum bands will be included in the sale.

The TRAI needs to make some decisions pretty quickly in order to hit this new April/May timeframe. Time is ticking by.