‘Issue of captive networks, which may concern a few, could aid telcos’ enterprise business growth’

The notice inviting applications (NIA) for the upcoming spectrum auction has a few incremental positives for telcos, including duration of right-to-use spectrum unchanged at 20 years (vs 30 years announced earlier), which restricts total spectrum payouts; and an easier payment option with the introduction of 20 equal annual instalments, said ICICI Securities on Thursday.

The spectrum usage charge (SUC) has been scrapped , indirectly reducing the cost of acquiring spectrum; spectrum surrender norms are without penalties; and spectrum leasing for captive non-public networks has been allowed.

“The Department of Telecommunications (DoT) has allowed enterprises to obtain spectrum directly to set up their own isolated networks, which may concern a few; however, we believe, large enterprises will accelerate the private network ecosystem and aid telcos’ enterprise business growth,” it said.

Spectrum prices for the key 3300MHz and 28GHz are what the Telecom Regulatory Authority of India (TRAI) had recommended, it said, adding that this was broadly in line with its estimates for Bharti Airtel and Reliance Jio (RJio).

The spectrum auction will begin on July 26.

DoT on Wednesday released a notice inviting applications (NIA) for the auction of spectrum in the 600, 700, 800, 900, 1800, 2100, 2300, 2500, 3300 MHz and 26GHz bands.

ICICI Securities further said spectrum purchased in the upcoming auction will have two payment options — full, or part upfront payment of total bid amount within 10 days of auction completion, and the remainder in 20 yearly equal instalments, with the first instalment due in 10 days of completion of auction.

The rate of interest for calculating instalments has been fixed at 7.2 per cent, and pre-payment of spectrum dues has been allowed without any penalty.

Telcos are also allowed to provide captive non-public networks, and enterprises can directly obtain spectrum from DoT, which is a welcome step, it said.

Enterprises can set up captive non-public networks (CNPN) to establish their own isolated network in two ways – by leasing spectrum from telcos, for which DoT will issue spectrum-leasing guidelines; and obtaining spectrum directly from DoT. In this regard, DoT will undertake demand studies and, thereafter, seek TRAI recommendations for direct assignment of spectrum to such enterprises,” it said.

“Large enterprises establishing isolated networks (by obtaining spectrum directly) would accelerate the ecosystem and use-case for CNPN, and help telcos develop new markets for medium-sized enterprises, ” it added.

Published on June 16, 2022