With price wars unleashed by Reliance Jio Infocomm pushing most Indian mobile phone service providers into the red, the forthcoming 5G auction may evoke a poor response as many players consider the spectrum prices beyond their reach.

In the latest development, India’s third-biggest telco by subscribers Bharti Airtel may not buy the 5G spectrum and the “expensive” 700 MHz premium airwaves, Business Standard reports quoting sources.

Instead, it plans to bid for airwaves in the 800, 900, and 1800 MHz bands for which its licenses have either expired or are about to expire, the daily added. Bharti Airtel has spectrum in 800 MHz band after it bought Tata Teleservices.

Vodafone-Idea too has earlier said it will not take part in 5G auctions if they are held this year.

While India’s average revenue per user is one of the lowest in the world at $1.70 per month, the price recommended by Telecom Regulatory Authority of India for 5G spectrum works out to US$70 million per Mhz. Global brokerage CLSA has pointed out this was four times the South Korean figure.

Moreover, telecom players believe that the 5G ecosystem is not expected to be commercially viable for at least three years. At the current base price, analysts point out that the internal rate of return on incremental investment will be as low as 7% for the telcos.

It will also require a bigger footprint of optical fiber network as 5G technology dictates fiber coverage levels of over 70%, versus 25-30% levels at present.

Market research firm CRISIL estimates that if each player were to reach this level individually, Indian telcos may need investments of up to 1 trillion rupees ($ 13.9 billion) just for laying fiber networks over the next two to three years.

Bharti Airtel had in June urged the government to review the price of radio waves for 5G spectrum. The company’s managing director and CEO for India and South Asia, Gopal Vittal, had pointed out that 5G requires large quantities of the spectrum and the prices set by the telecom regulator were not affordable.

Industry experts believe that Reliance Jio is likely to upgrade to 5G rapidly to retain its tech edge. It is currently the only profit-making telco in the country, while both Vodafone-Idea and Bharti Airtel reported losses in the recent quarters.

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