Union Finance Minister Nirmala Sitharaman on Tuesday said the government will auction telecom spectrum in 2022, which will facilitate private players to roll out 5G services before March 2023.
“Telecommunication in general, and 5G technology in particular, can enable growth and offer job opportunities. Required spectrum auctions will be conducted in 2022 to facilitate roll-out of 5G mobile services within 2022-23 by private telecom providers,” the Minister announced during the Budget speech.
Speaking to reporters post the Budget presentation, Telecom and IT Minister Ashwini Vaishnaw said the Telecom Regulatory Authority of India (TRAI) was working on its recommendations for the spectrum auction and these were expected to come by March. At the same time, the Department of Telecom, he said, was preparing for auctions and readying the NIA (notice inviting applications) and other documents.
“As soon as the recommendations come, we can go ahead with the auction and then start the roll-out of 5G services in 2022-23,” he said.
In her speech, the Finance Minister also added that a scheme for design-led manufacturing would be launched to build a strong ecosystem for 5G as part of the production-linked incentive scheme.
Further, to enable affordable broadband and mobile service proliferation in rural and remote areas, 5% of annual collections under the Universal Service Obligation Fund (USOF) will be allocated. This will promote R&D and commercialisation of technologies and solutions, she said.
“Our vision is that all villages and their residents should have the same access to e-services, communication facilities, and digital resources as urban areas and their residents. The contracts for laying optical fibre in all villages, including remote areas, will be awarded under the BharatNet project through PPP in 2022-23. Completion is expected in 2025. Measures will be taken to enable better and more efficient use of the optical fibre,” Ms. Sitharaman added.
Fall in revenues
According to the Budget documents, the government has lowered its estimates of revenue from the telecom segment to ₹52,806 crore for the upcoming financial year (2022-23).
However, for the current fiscal, the government estimates the receipts to be higher at ₹71,959.24 crore as against the budget estimates of ₹53,986.72 crore from ‘other communication services’.
Receipts under 'other communication services' mainly relate to the licence fees from telecom operators and receipts on account of spectrum usage charges.
BSNL bonanza
The government will make a capital infusion of ₹44,720 crore in state-owned BSNL in 2022-23 — the majority of this year’s estimated capital expenditure, the Budget documents show. “The provision is made for capital infusion for 4G Spectrum, technology upgradation and restructuring in BSNL,” as per the document.
Additionally, the government will provide additional financial support of ₹3,300 crore to the telecom firm for voluntary retirement scheme and ₹3,550 crore as grant-in-aid for payment of GST.
Sabyasachi Majumdar, Senior Vice-President & Group Head, Corporate Ratings, ICRA Limited, said overall, the budget focussed on increasing the digital penetration in the country by way of e-learning, digital health programmes and digital banking. This is likely to propel the usage of telecom services.
Likewise, Sandeep Aggarwal, Chairman, Telecom Equipment Promotion Council (TEPC), welcomed the announcement of 5G auctions. However, he called for ‘free or low cost spectrum’ to be given to all users and operators initially, and when the market matures in 2-3 years, the government can go for auction. “This will get better prices and encourage healthy competition in the telecom sector…duty reduction in the telecom sector will be conducive to growth,” he added.
Peeyush Vaish, Partner and Telecom Sector Leader, Deloitte India noted that the USO funds have historically been used for the rural infrastructure roll-out. A 5% allocation towards R&D and commercialization of the technology could help some of the indigenous niche players building up technologies around O-RAN and Private networks.
“....FM’s announcement around the 5G spectrum auction, 100 percent fiberisation with PPP model will provide the required impetus to build upon ubiquitous and reliable internet connectivity. Thereby, bridging the digital divide for a conducive and inclusive development of the nation in keeping with the ‘Digital India’ initiative. Further, design-led initiatives for 5G under the PLI scheme and 5% of USOF for R&D purposes will strengthen the ‘Make in India’ initiative, and contribute to making India a global manufacturing hub,” Nitin Bansal, MD, India & Head-Networks - Southeast Asia, Oceania, and India at Ericsson, said.
