The past year turned out to be quite eventful for the Indian telecom sector. The government pushed the pedal on the 5G front by granting permissions to telcos to carry out trials. Further, to promote public Wi-Fi services and development of related infrastructure, the Pradhan Mantri Wi-Fi Access Network Interface (PM-WANI) programme was launched. The Department of Telecommunications (DoT) also issued guidelines on the implementation of the production-linked incentive (PLI) scheme for telecom and networking equipment providers, with the objective of developing a robust domestic equipment manufacturing industry. Most recently, the government has approved the implementation of BharatNet through the public-private partnership (PPP) mode, a move that has been lauded by all stakeholders.
On the flip side, the adjusted gross revenue (AGR)-related turmoil continues to be a pain point for operators, with the Supreme Court recently denying any modification to AGR calculations.
A look at the key policy and regulatory moves during the year…
The government conducted auctions for the sale of spectrum to Indian telecom operators in early March 2021. A total of 2308.8 MHz of spectrum across seven bands, worth about Rs 3.92 trillion, was put up for sale. The exchequer netted Rs 778.14 billion, almost double the initial estimates, even though only 37 per cent (855.6 MHz) of the total spectrum was sold. Spectrum in bands such as 700 MHz and 2500 MHz, considered to be premium and most suitable for 5G, had no takers at all. Meanwhile, Reliance Jio emerged as the highest bidder, winning 488.35 MHz of spectrum for Rs 571.22 billion, followed by Bharti Airtel, which picked up 355.45 MHz for Rs 186.98 billion, while Vodafone Idea (Vi) acquired 11.8 MHz of airwaves for Rs 19.93 billion.
In May 2021, DoT granted permission to several telecom service providers (TSPs), including Bharti Airtel, Reliance Jio, Vi, and Mahanagar Telephone Nigam Limited, for conducting trials for the application of 5G technology. The experimental spectrum was given in various bands including the mid-band (3.2 GHz to 3.67 GHz), millimetre wave band (24.25 GHz to 28.5 GHz), and sub-gigahertz band (700 GHz). TSPs were also permitted to use the existing spectrum owned by them (800 MHz, 900 MHz, 1800 MHz and 2500 MHz) to conduct 5G trials. The duration of the trials at present is six months. This includes a time period of two months for procurement and setting up of the equipment.
AGR blues continue
In July 2021, the Supreme Court rejected telcos’ plea to recalculate their AGR dues. The move came after telcos such as Airtel and Vi sought rectification of arithmetical errors in the calculation of their AGR dues. Earlier, the apex court had rejected the self-assessment done by operators and had ruled that DoT’s calculations were to be deemed as final.
PPP model for BharatNet implementation
In July 2021, the union cabinet approved the revised implementation of BharatNet through the PPP mode in villages across 16 states, with a viability gap funding of Rs 190.41 billion. The cabinet decided that the total expenditure for covering these 360,000 villages would be Rs 294.3 billion. Following this, Bharat Broadband Network Limited invited global tenders for project implementation, including the creation, upgradation, operations and maintenance, and utilisation of BharatNet infrastructure.
PLI scheme for a manufacturing boost
DoT issued guidelines on the implementation of the PLI scheme for telecom and networking equipment providers. The scheme will be implemented within the overall financial limits of Rs 121.95 billion, over a period of five years. The scheme has received applications from 37 vendors and contract manufacturers, including Nokia, Cisco, Flex, Foxconn and Jabil. A number of domestic companies, including Tejas Networks, Coral Telecom, HFCL and Dixon Technologies, have also applied for the scheme.
The union cabinet announced the launch of the PM-WANI initiative in a bid to promote the growth of public Wi-Fi networks in the country. The programme entails setting up of public Wi-Fi networks by public data office aggregators to provide public Wi-Fi service through public data offices.
Trusted telecom portal
DoT amended the telecom licences to make it mandatory for telcos to use equipment only from trusted sources. To this end, the government launched a trusted telecom portal on June 15, 2021, signalling the coming into effect of the National Security Directive on Telecommunication Sector.
The way forward
Going forward, it would be interesting to watch how the recently announced regulatory moves impact the sector. A lot of opportunities are expected to come to the fore for multiple stakeholders. For instance, with the revised strategy for BharatNet implementation in place, the private sector will have a much larger role in the implementation. Likewise, the PLI scheme is expected to be a harbinger of opportunities for equipment manufacturers.