Telcos in India and Spectrum Costs
The telecommunications sector in India faces a significant challenge due to high spectrum costs, which are among the highest worldwide. This situation may impact India's digital goals in the future, as highlighted by a recent report from London's GSMA.
Issues with Spectrum Pricing and Sales
- High reserve prices have traditionally hindered spectrum sales in India, leading to:
- Unsold airwaves.
- Contributing to spectrum scarcity.
- Hefty airwave base prices have resulted in higher final prices in auctions.
Recommendations by GSMA
- Governments and regulators should prioritize spectrum pricing that aligns with market realities to foster long-term digital growth.
- Affordable spectrum can unlock:
- Faster network expansion.
- Better service quality.
- Greater digital inclusion for citizens.
Recent Trends and Impact
- Recent lower unit prices in spectrum sales have not been sufficient to reverse the spectrum cost build-up trend.
- Acquisition of new bands for 5G and 4G networks has increased the spectrum cost burden between 2015 and 2023.
- Spectrum costs account for 26% of operator recurring revenues, ranking among the highest globally.
Global Comparisons and Financial Impacts
- Globally, cumulative spectrum costs account for 7% of operator revenues, showing a 63% increase over the past decade.
- The telecom industry's financial challenges are exacerbated by a 60% decline in average revenue per MHz of spectrum over the same period.