India Open to Making 5G Airwaves Cheaper in Auction This Year

India may lower the base price for fifth-generation, or 5G, airwaves in the upcoming auction to spur participation by local telecom firms and expedite the rollout of these superfast networks, a person with knowledge of the matter said.

The Narendra Modi-led government is planning to assign these airwaves in August or September, the person said, asking not to be identified as the discussions are private. The reserve price for the auction may be reduced as the investment required for 5G networks is manifold that of 4G, the person said.

A lower floor price would be a huge boost for Bharti Airtel Ltd. and the unprofitable Vodafone Idea Ltd., two of the only three private sector operators left after Reliance Jio Infocomm Ltd. disrupted the market in 2016 with free calls and ultra-cheap data, whittling down competition in a sector that once had a dozen players. The sector lobby, which has seen wireless operators shoulder heavy debt loads after expensive past spectrum auctions, warned in August that half the spectrum will be unsold unless it’s priced lower.

The government had earlier indicated the reserve price for 5G airwaves at 4.92 billion rupees ($64.1 million) per megahertz of spectrum in 3,300 to 3,600 Mhz bands which are most suitable for the new technology.

A spokeswoman for India’s communications ministry didn’t immediately respond to request for a comment.

The federal government needs to walk the tight rope now between boosting the exchequer and encouraging local operators to bid for 5G airwaves, as it races to catch up with other major Asian markets like South Korea that have had these services for years. China and Japan don’t charge upfront fees for spectrum and assign airwaves based on the companies’ network deployment.