Union Finance Minister Nirmala Sitharaman on Tuesday said the government will auction telecom spectrum in 2022, which will facilitate private players to launch 5G services before March 2023.
“Telecommunications in general, and 5G technology in particular, can enable growth and provide job opportunities. The spectrum auction required by private telecom providers to facilitate the roll-out of 5G mobile services within 2022-23 will be conducted in 2022,” the minister announced during the budget speech.
Talking to reporters after the budget presentation, Telecom and IT Minister Ashwini Vaishnav said that the Telecom Regulatory Authority of India (Trai) is working on its recommendations for spectrum auction and these are expected to come by March. At the same time, the DoT, he said, was preparing for the auction and preparing the NIA (Notice Inviting Applications) and other documents.
“As the recommendations come in, we can go ahead with the auction and then start rolling-out 5G services in 2022-23,” he said.
In his speech, the Finance Minister also said that a design-led manufacturing scheme will be launched to create a strong ecosystem for 5G as part of the production-linked incentive scheme.
In addition, 5% of the annual collection will be allocated under the Universal Service Obligation Fund (USOF) to enable affordable broadband and mobile service dissemination in rural and remote areas. He said that it will promote R&D and commercialization of technologies and solutions.
“Our vision is that all villages and their residents should have equal access to e-services, communication facilities and digital resources as urban areas and their residents. Under the BharatNet project, the contract for laying optical fiber in all villages including remote areas will be awarded through PPP in 2022-23. Expected to be completed in 2025. Measures will be taken to enable better and more efficient use of optical fiber,” Ms Sitharaman said.
fall in revenue
According to budget documents, the government has reduced its estimate 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 that receipts from ‘other communication services’ will be ₹71,959.24 crore higher as against the budget estimate of ₹53,986.72 crore.
The receipts under ‘Other Communication Services’ mainly relate to receipts from telecom operators for license fee and spectrum usage charges.
BSNL Bonus
The government will infuse Rs 44,720 crore into state-owned BSNL in 2022-23 – the majority of this year’s projected capital expenditure, budget documents show. According to the document, “Provision has been made to infuse capital for 4G spectrum, technology upgradation and restructuring in BSNL.”
In addition, the government will provide additional financial assistance 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 Mazumdar, Senior Vice President and Group Head, Corporate Ratings, Icra Limited said that overall the budget is focused on increasing digital penetration in the country through e-learning, digital health programs and digital banking. This is likely to boost the use of telecom services.
Similarly, Telecom Equipment Promotion Council (TEPC) Chairman Sandeep Agarwal welcomed the announcement of 5G auction. However, he called for giving ‘free or low-cost spectrum’ to all users and operators initially, and when the market matures in 2-3 years, the government may go for auction. “This will lead to better pricing and encourage healthy competition in the telecom sector. Tariff reduction in the telecom sector will be conducive to growth,” he said.
Piyush Vaish, partner and telecom sector leader, Deloitte India, said the USO fund has historically been used for rural infrastructure roll-out. 5% allocation for R&D and commercialization of technology may help some indigenous niche players to build technologies around O-RAN and private networks.
“… Announcement of FM around 5G spectrum auction, 100 per cent fiberization with PPP model will provide the necessary impetus for building ubiquitous and reliable internet connectivity. Thus, keeping in mind the ‘Digital India’ initiative, nation-friendly and bridging the digital divide for inclusive growth.In addition, 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 make India a global manufacturing hub,” Nitin Bansal, MD, India and Head – Network – Southeast Asia, Oceania, and India at Ericsson, said.