Bharti Airtel will not participate in 5G spectrum auction at Trai recommended price

Bharti Airtel has said that the company will not buy 5G spectrum in the upcoming auction if the base price is fixed at Rs 492 crore per megahertz as recommended by the telecom regulator Trai.

The company is reeling under a debt of Rs 1.14 lakh crore with liability to clear statutory dues of around Rs 35,500 crore as per a Supreme Court order in October 2019 that upheld the government's stand on calculating levies over telecom licences.

"On the 3.5 Ghz band Trai has recommended price to Rs 50,000 crore for 100 mhz of spectrum. 5G requires a large block of spectrum. 100 Mhz spectrum for 50,000 crore, we can't afford. We believe it is too high. We will not pick it up at those prices," Bharti Airtel MD and CEO for India and South Asia Gopal Vittal said.

The industry watchdog, Telecom Regulatory Authority of India (Trai) has recommended that proposed base price of 5G spectrum in 3,300-3,600 Mhz band at about Rs 492 crore per Mhz unpaired spectrum on pan India basis.

The telecom operators have to shell out a minimum of Rs 9,840 crore on pan-India basis to buy spectrum in 3,300-3,600 Mhz band as Trai has suggested that it "should be put to auction in the block size of 20 MHz".

The Digital Communications Commission, apex decision making body at the Department of Telecom, has approved the suggestions made by Trai.

Vittal said that though telecom players raised mobile call and internet rates in December, the tariff needs to go up further for better return on investments.

"We have ARPU of Rs 135. In the end state, I think we need to see ARPU of Rs 300 in Indian telecom. I think that is when we will turn a reasonable return of capital on the overall business," Vittal said.

He also said that the ARPU of the company will go up due to the last round of tariff hike. But it may not be enough to give return on the investments.

"While our ARPU will go up in next quarter because of tariff increases, they are just not good enough. At Rs 200, we will barely be head above water in terms of return on capital. It is clearly something that we need to see moving. I cannot comment on what the timing is," Vittal said.