India’s telecom operators have urged the government to lower spectrum prices ahead of the next auction, flagging weak returns on massive 5G investments.
The industry‘s concerns come as policymakers prepare for another round of spectrum allocation, with operators arguing that high reserve prices could further strain balance sheets already stretched by heavy capital expenditure on 5G rollout.
The Cellular Operators Association of India (COAI), which represents major telecom firms, has raised the issue with the government, highlighting that companies are yet to see meaningful returns on investments made in next-generation networks.
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Telecom operators have collectively invested billions of dollars in rolling out 5G infrastructure since the last auction in 2022, but monetisation remains limited as use cases and enterprise adoption are still evolving. Industry body says revenue growth has not kept pace with the scale of capital deployment, making future investments more sensitive to input costs such as spectrum.
Weak 5G returns
The industry has asked the government to factor in these realities while setting auction prices, noting that spectrum acquisition is among the largest components of telecom capital expenditure.
The issue gains significance as the Telecom Regulatory Authority of India has recommended auctioning 11,790 MHz of spectrum across multiple frequency bands, including 600 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz and 26 GHz.
Lower frequency bands such as 600 MHz are particularly valuable for improving indoor coverage and expanding connectivity in rural areas, while higher bands are critical for high-speed data services and capacity enhancement.
The regulator has pegged a base price that values the total spectrum on offer at around ₹2.1 lakh crore, about 19% lower than the reserve price suggested for the previous auction in 2022. However, operators argue that even with a reduction, pricing remains high relative to current returns from 5G services.
Industry body have also pointed to global models where spectrum is either priced lower or allocated under different frameworks, sometimes linked to rollout obligations, suggesting that India may need to revisit its approach as it prepares for future technologies such as 6G.
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The government, for its part, has already taken a different route for satellite communications by allocating spectrum administratively rather than through auctions. However, for mobile services, auctions remain the primary mechanism.
The outcome of the pricing debate will play a key role in determining participation levels and bidding intensity in the upcoming auction. Operators are likely to calibrate their purchases based on financial capacity and expected returns, potentially impacting how much spectrum is ultimately sold.