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.