No 30-year spectrum lease period for telcos

financialexpress.com:

Telecom operators will have to remain content with a 20-year lease of spectrum as the department of telecommunications (DoT) has decided not to extend the same to a 30-year period.

In a set of telecom sector reforms announced in September, 2021, the Union Cabinet had approved increasing the lease period of spectrum acquired in future auctions to 30 years. However, in the last 5G spectrum auction and the upcoming spectrum auction starting June 25, DoT has not modified the lease period and kept it at 20 years.

The reasons for not switching to a 30-year spectrum tenure can be attributed to expensive valuations for the operators as well as potential loss of revenue even for the government compared to the auction-determined price after the 20-year period, officials said. Further, owing to the changing pace of technology, officials said a spectrum period of 15 to 20 years is considered optimum.

In September 2021, the government approved several structural and process reforms for the telecom sector to address liquidity needs and boost growth, competition, and consumer interests. The thought process behind the government in changing the spectrum tenure to 30 years was to encourage investments in the sector, pave the way for liquidity, and give a sense of policy certainty.

In fact, the Telecom Regulatory Authority of India (Trai) in its recommendations on 5G spectrum auctions had said that the reserve price for 30 years should be equal to 1.5 times the reserve price of spectrum allocation for 20 years.

Trai had said the valuation of spectrum for the increased allocation period of 30 years should be proportionately higher than the valuation of the same spectrum for an allocation period of 20 years.

“After arriving at the reserve