The Department of Telecommunications (DoT) is finalising plans for allocating 5 Mhz of 4G spectrum to BSNL shortly on 2100 Mhz band. Ahead of allocations, the department has requested the PSU to submit a plan of action on 4G support roll-out preparedness including equipment procurement and the capacity to fund the network upgrade.
“We will allot BSNL some (5 Mhz) spectrum for 4G support and therefore we’ve requested the company to submit a report of their 4G preparedness and how they intend to secure equipment for that. We also wish to be aware of the origin of the funding to the capex stemming from the 4G network growth so the funds allocated via the spectrum might be best used,” a senior DoT official stated.
The official added that the feasibility of spectrum to BSNL has an opportunity cost as, had been sold to personal telcos, the authorities could have earned earnings. “But we must support the PSUs. In the exact same time we’ll track their planning and equipment and pre-launch preparedness as well,” the official said.
The official also stated that while both BSNL and MTNL would be allocated to the 4G spectrum these queries are sent to BSNL only and not to MTNL. According to BSNL Board proposal, the price of this spectrum is at the range of Rs. 11,000 crore. In 2017, BSNL had delivered a board proposal seeking 5MHz spectrum at the 2100 MHz band, which it wanted to partially fund by providing additional equity to the government.
The acquisition of additional spectrum in the 2100 MHz band is almost life saving for BSNL to get all-India rollout of 4G services throughout the long-term Evolution path to match competition. The DoT monitoring and demand for an action strategy report are aimed at ensuring that the funds are fully optimised to ensure revenue returns to the authorities.
Another source said the government may follow the IIM report while allocating 4G spectrum to BSNL. The report had suggested that 5 Mhz of spectrum in 2100 MHz band as 4G spectrum ought to be allocated to BSNL immediately but only for a restricted 5-year period. This may require around Rs. 1,875 crores of license fee payment for five years. This can be financed by equity injection from the authorities or by borrowing the same together with guarantee from the government, given the fiscal state of BSNL.
The report implied that the authorities should pose conditions on BSNL while allocating the spectrum that BSNL should enter aggressive tower sharing and leasing agreements with other telecom service providers to reduce the cost of rolling out 4G services by BSNL. Instead of Rs. 11,000 crore requested for by BSNL to roll out 4G services, BSNL may be requested to re-examine the projected capital expenditure with tower-sharing and managed-services model.
The entire cost as per BSNL quotes are Rs. 9,600 crore. BSNL expects to pay half of this amount through equity route (by issuing additional stocks to the government) if allowed, and the remainder through revenue generated from business.