Recently it was reported that India is preparing itself for the next round of 5G auctions. With virtually two players in the game and with no chance for a third player entering (VI being financially strained, and BSNL is yet to rollout 4G), the reserve price is the only metric of interest. This note will make an attempt to estimate the reserve prices of key 5G bands (600, 700, 3500 & 26 GHz), using the past TRAI’s methodology.
TRAI’s Pricing Principle
In order to value 5G bands, the TRAI uses the prices of the other 4G bands as references. In other words, the prices of 5G bands are not derived independently — ground up. This is also true for all existing 4G bands as well, except for the 1800 MHz band, whose pricing is done ground up using various valuation models. The prices of other bands get extracted from the value of the 1800 MHz and such other bands with similar propagation characteristics. To understand these better, let’s dive straight into the pricing models that TRAI used to value 3500 MHz & 700 MHz bands for the past auction, and using these models we can make a reasonable estimate of the RP of 5G bands in the forthcoming auctions.
