India to get a 5G push as Centre plans to revive BSNL

With the government focusing on starting 5G mobile services and spectrum auctions in the next fiscal besides a performance-linked incentive scheme for 5G design-led initiatives, India’s telecom sector is believed to get a big 5G push.

The government is said to be lending a helping hand by infusing ₹44,741 crore into loss-making Bharat Sanchar Nigam Ltd (BSNL) as capital for 4G spectrum, technology up-gradation and restructuring besides ₹3,550 crore as grant-in-aid for payment of Goods and Services Tax on allocation of 4G spectrum. It further expects to earn ₹52,806.36 crore from licence fees and spectrum charges in FY23.

 “Telecommunication in general, and 5G technology in particular, can enable growth and offer job opportunities. Required spectrum auctions will be conducted in 2022 to facilitate rollout of 5G mobile services within 2022- 23 by private telecom providers," finance minister Nirmala Sitharaman said.

The budget announcement has also given a much-needed push for 5G acceleration. Furthermore, continued emphasis on the importance of mobile connectivity and broadband for economic development, especially in rural India, will further boost the telecom and associated sectors. Also, the focus on 5G auctions and rollouts will help India catch up with countries that have launched 5G services, with nearly 200 telcos in 78 countries having already launched 5G services.

The industry has repeatedly sought for reduction in 5G reserve prices. However, the question is how many service providers are prepared to make the dive for the auctions.

“With the current financial situation of most telecom companies, it is likely that only a couple of the larger players are likely to make the move to 5G operations," said Tony Verghese, partner at J. Sagar Associates.

The finance minister has also said that a scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the performance linked incentive (PLI) scheme. This will help position India as a hub for 5G equipment manufacturing and exports.

Indigenous manufacturing of 5G devices would also help to develop globally recognized intellectual property rights (IPRs) in India. The government expects receipts of ₹71,959.24 crore in FY22 from the telecom sector, more than the budgeted estimates of ₹53,986.72 crore. For FY22-23, the government is expecting lower revenue of ₹52,806.36 crore, mainly from licence fees from telecom operators and receipts from spectrum usage charges.

The telecom department collects recurring licence fees from telcos at 8% of adjusted gross revenue (AGR) and spectrum charges are calculated either as a percentage of AGR depending up on at the quantum of spectrum assigned.