Spectrum auction likely early next year; will not bid for 5G spectrum if reserve price is high: Bharti Airtel

The Department of Telecommunications might conduct spectrum auction between January and March next year but Bharti Airtel will refrain from bidding for 5G spectrum if the reserve price is high, a top official of the telecom company said on Wednesday.

Bharti Airtel India and South Asia Managing Director and Chief Executive Officer Gopal Vittal said the company is working on a spectrum auction strategy and may look for some radiowaves frequencies below 1,000 Megahertz (Mhz) frequencies to improve network inside buildings and in rural areas.

"We are hearing from the Department (of Telecommunications) that there may be an auction early next year. Anywhere between January and March time frame.

"If in that auction, the reserve price of 5G is high... for many reasons, including the devices being what they are, the devices and the ecosystem being nascent and the fact that spectrum price where they are, we will not buy at these prices. We will not be able to afford it," Vittal said during Airtel's earnings call.

Regulator Trai has recommended a price of Rs 492 crore per Mhz for spectrum in the 3,300-3,600 Mhz band which is considered suitable for 5G services at present.

Telecom operators interested in buying radiowaves for 5G services will have to shell out a minimum of Rs 9,840 crore on a pan-India basis to buy spectrum in the 3,300-3,600 Mhz band as Trai has suggested that it should be put to auction in the block size of 20 MHz.

Earlier also, Bharti Airtel had said that it will not bid for this spectrum at the Trai-recommended price as companies will need to shell out about Rs 50,000 crore to acquire a decent quantity of frequencies in this band.

Vittal said the company is evaluating whether it should bid for spectrum in the 1,800 Mhz band, popularly known as 2G spectrum, because use of 2G services is coming down every quarter.

The company may look at incremental capacity in 2,300 Mhz band which is currently being used for 4G services.

Bharti Airtel on Tuesday reported a narrowing of losses in the September quarter to Rs 763 crore. The losses were significantly lower than Q2FY20, when it stood at Rs 23,045 crore, after the company had made provisions of Rs 28,450 crore in the immediate aftermath of the Supreme Court ruling on statutory dues.

The company posted revenues of Rs 25,785 crore in the latest September quarter, up 22 per cent over the corresponding period last year "with strong growth across the portfolio – geographies and segments", a company statement had said.

Bharti Airtel's consolidated net debt increased to Rs 1.37 lakh crore at the end of September 30, 2020, from Rs 1.16 lakh crore in the previous quarter on account of statutory liability.

Vittal said the company is in discussions with the DoT seeking clarity on the AGR (Adjusted Gross Revenue) payments.

According to the government, telecom operators, including Bharti Airtel and Vodafone Idea, which have pending AGR dues will have to pay 10 per cent of the total liability by March 31 irrespective of the part-payments made by them.

Vodafone Idea will have to pay around Rs 5,825 crore and Bharti Airtel will have to pay Rs 4,398 crore against the total demand of Rs 58,254 crore and Rs 43,980 crore, respectively, raised by the DoT following the apex court order.

The payments have to be made irrespective of part-payments of Rs 7,854 crore and Rs 18,004 crore already made by Vodafone Idea and Airtel, respectively.

In response to a question on a competitor's strategy for low-cost 5G devices, Vittal said the company is closely studying the space.

Reliance Jio is working on 5G smartphones that could be sold in India for as low as Rs 2,500-3,000 apiece.

Vittal said the company has started developing 4G small cells in Bengaluru as part of Open RAN (Radio Access Network) and is exploring to do the same for 5G technology.

He said Bharti Airtel's move to develop some telecom gears is not intended to leave out the existing equipment makers and that it will go along with existing partners.