India spectrum sale may fall short of expectation |
According to Industry experts, the Indian government may be able to generate an initial payment of only 1.4 billion dollars from its upcoming spectrum auction. This indicates that the next spectrum sale could generate only around 4.9 bn to 5.6 billion dollars, as against the 82.3 billion dollars worth of airwaves the government intends to sell at a base price. Successful bidders usually pay an upfront amount of 25 percent for sub-1 GHz spectrum, and 50 percent upfront for higher frequency bands. The remainder is paid over 16 years in annual installments. Loss-making telecom players Vodafone Idea and Bharti Airtel will likely not participate in the 5G spectrum auction planned in March or April. Airtel is expected to instead, purchase some 4G airwaves, particularly in circles where its permits are expiring. Of the three players, Jio is expected to buy some 5G spectrum but not much, besides some 4G. Jio may do so only to get the first-mover advantage. The government will receive 2.8 bn to 3.5 billion dollars from license fees and spectrum usage charge, below the 18.7 billion dollars budgeted for FY21. Without the adjusted gross revenue dues, the government will be unable to meet its target.
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