Airtel & Vodafone find an unlikely ally in their gripe over 5G

NEW DELHI: Reliance Jio wants 5G auctions to be put off until telecom operators conduct trials and develop use cases for the airwaves priced “exorbitantly high”, a senior executive said, in a rare instance where the telco seems to have found common ground with rivals Bharti Airtel and Vodafone Idea.And, like Airtel, Jio also wants 4G airwaves to be auctioned as soon as possible, to keep pace with surging demand for data and ease network congestion.“5G spectrum should be auctioned in 2021 … Nobody will buy 5G now because there is no use case, the price is exorbitantly high,” said the executive, seeking anonymity.The comment indicates a change in Jio’s stance as the RIL unit had previously sought auctions of 4G and 5G airwaves at the earliest. Airtel has been demanding auction of all other bands while keeping 5G aside for a year. Voda Idea has sought deferment of all spectrum sales.Jio didn’t respond to ET’s emailed queries until press time Tuesday.Both Airtel and Vodafone Idea have said they would not buy 5G airwaves at the price recommended by the Telecom Regulatory Authority of India (Trai), terming it too expensive at over seven times the price for 5G bands in South Korea.The Department of Telecommunications has said it planned to auction 4G and 5G airwaves in December 2019 or early 2020, but has yet to allot spectrum for holding 5G trials. The department has also yet to take a call on Trai’s recommendations on price. 71286075 The regulator has recommended a pan-India base price of Rs 492 crore per MHz for 5G radio waves in the 3.3-3.6 GHz bands, and mandated that telcos buy in a block of 20 MHz. Thus, an operator would need to pay at least Rs 9,840 crore for pan-India 5G airwaves, or roughly Rs 50,000 crore for the 100 MHz a carrier would need for an effective roll out of services. “Nobody can make such a massive investment as nobody has a clue about the India-specific use cases and thus, nobody can make any revenue estimates,” said the Jio executive.To develop use cases, operators should be given spectrum for some time, during which they should be asked to develop use cases, he added.“…if there is any revenue earned by that operator, that can be shared with the government by any defined formula. But please allow operators to put the infrastructure in place and develop some use cases. That is the right way,” the executive said.The executive suggested that during this time, 5G spectrum be divided among telcos on the basis of geography. “Give somebody in Delhi, somebody in Mumbai and take the revenue earned out of that spectrum. Only once the revenue case is built or understood by operators can they bid accordingly,” the executive added.The executive’s comments come after parent Reliance Industries’ chairman, Mukesh Ambani, said at the company’s 42nd annual shareholders meeting that the conglomerate would work towards becoming a debt-free company within the next 18 months.Jio is the only profitable telco in India and the largest by subscribers, but has huge debt — net debt at the end of June was Rs 75,000 crore. According to a Goldman Sachs report, its net debt-to-Ebitda at the end of June was six times, compared with Airtel’s 3.4 times, signalling debt-fuelled growth of India’s newest telecom operator.But the executive downplayed any financial constraints for Jio.“Jio has money, but it doesn’t make sense to park your money in something that you don’t know is an investment or an expense,” said the executive.

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