Budget 2022: 5G auction could be a big revenue story

The Budget 2022 announcement made by the Finance Minister on 5G technology could be a huge shot in the arm for the government’s revenue targets. A key to high-quality broadband connectivity, it was stated the rollout of this service will be made during 2022-23.

Just to go back in time, the last round of 4G auctions brought in revenue in excess of Rs 77,800 crore for the government. All eyes will be on how much can be raked in this year. At a time when there is a need to bring in a lot of money and also quickly, auctioning the 5G spectrum could well be the answer. Peeyush Vaish, Partner and Telecom Sector Leader, Deloitte India, thinks the roll-out of 5G across the country will also happen much faster than other previous generation technologies. “This is considering the fact that the Finance Minister talked about fiberisation of all villages by 2025. Focus on digital education including digital universities will further push the need for high-speed broadband across the country.”

The potential to generate big money through the spectrum auction does find many takers. Deven Choksey, MD, Choksey Securities, says the revenue could be as high as Rs 1.25 lakh crore or a jump of over 60 per cent. According to him, this auction will go beyond seeing interest from just the cellular operators. “Large business groups such as Tata and Adani are betting big on new-age businesses where bandwidth is critical. 5G spectrum will have interest from those in the B2B enterprise business and also B2C,” he says. Besides, the payment will be spread over time (expected to be 10 years) and that gives the owner of the spectrum enough time to monetise that investment. “It is quite likely that an incumbent operator may buy it and lease it out to those who need it. This auction of spectrum will throw up many ways to recover the investment. In that sense, this 5G auction is bound to be different,” he said.

The Finance Minister also said “a scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive (PLI) scheme.” Industry trackers say this can go well beyond manufacturers to the telecom service providers. “The PPP model to be used for firming up the 5G infrastructure will enable leveraging on the strength of public private partnerships,” adds Arvind Sharma, Partner, Shardul Amarchand Mangaldas & Co.

Also read: Budget 2022 Live Updates: LIC disinvestment this year, says FM Sitharaman