BSNL asks for 5G spectrum from the Govt

Bharat Sanchar Nigam Ltd, which is in the middle of a massive turnaround program, has officially asked the government for the allotment of 5G spectrum, according to Sanjay Dhotre, junior minister for communications, Government of India.

“Bharat Sanchar Nigam Limited (BSNL) has requested DoT to assign spectrum for 5G services on Pan India basis (except for Delhi and Mumbai),” the minister said today.

The move comes days after Dhotre said the government intends to give 5G spectrum to BSNl in the same manner that it gave 4G spectrum to the taxpayer-funded telecom operator.

BSNL was given 4G spectrum even before the same was made available to private sector players, with the condition that BSNL should pay the price of the spectrum as determined by the auction later.

It is therefore more than likely that BSNL may be given 5G spectrum before the auction, which is scheduled to take place in the September-October time period.

However, unlike 10 years ago, BSNL is unlikely to be able to pay cash for the spectrum being allocated to it.

This is because the company has very little financial capacity due to estimated accumulated losses of nearly Rs 1 lakh cr.

5G spectrum is likely to cost around Rs 30,000-40,000 cr.

However, the government is likely to allow all buyers — including BSNL and private players — to enter into long-term payment schemes for the spectrum.

This would allow these companies to take possession of the spectrum, launch data services with it, and then use the proceeds of the 5G business to pay for the spectrum.

However, it remains to be seen how successful BSNL will be in generating revenue from a 5G data service.

The company failed to make much use of the 4G spectrum that was given to it without any auction in 2010, which resulted in pushing the public sector player to near irrelevance in a market that is dominated by data services.

Meanwhile, the allocation of spectrum to BSNL — likely to happen during April-June this year — will further bring down the total quantum of 5G spectrum being put up for auction this year.

While globally, about 600 MHz of spectrum has been identified as 5G-suitable, in India, only about 275 MHz is available for 5G services due to the utilization of certain bands by satellites.

Ideally, companies would like to roll out their 5G service on 100 MHz of spectrum.

However, since there are four operators — including BSNL, Vodafone Idea, Airtel and Jio — each operator can only hope to get less than 70 MHz.

It is possible that the government will give BSNL 50 MHz, leaving 225 MHz to be allocated to the other three operators.

It is also possible that some operators — such as Vodafone Idea — may not purchase 5G spectrum across the country, and may buy airwaves only in license areas where the company has a strong market share — such as Maharashtra, Haryana, Mumbai, Kerala and Karnataka.