BackMobile call, service rates can go up by 12-15%: COAI
The COAI contested the analysis shared by telecom minister that there will an impact of only 1.3 paise per minute on call rates
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New Delhi: Mobile call and service rates can go up by 12-15% to make up for the Rs1,09,874.91 spectrum price telecom operators need to pay to government, industry body COAI said on Tuesday.
The Cellular Operators Association of India (COAI), which represents all telecom companies that won spectrum in recent auction, contested the analysis shared by telecom minister Ravi Shankar Prasad and seconded by telecom secretary Rakesh Garg that there will an impact of only 1.3 paise per minute on call rates.
“While the industry would be happy to review this calculation by the DoT, the industry’s analysis of the financial implications of the auction indicates an increase of more than 12-15% on the present tariffs, to make up for the cash outflows of the operators," COAI said in a statement.
It said that the analysis shared by DoT does not seem to have factored in inflation, which is inevitable over a long period of 20 years.
“It is confusing for the industry, that after taking all the factors such as inflation, high spectrum costs, high cost for equipment and substantial regulatory costs, combined with low returns, how a hike of 1.30 paise per minute in tariffs would address the industry’s financial woes," COAI said.
In the auction, Idea has bought spectrum for Rs30,306.98 crore, Airtel at Rs29,130.20 crore, Vodafone at Rs29,959.74 crore, Reliance Jio Infocomm at Rs10,077.53 crore, Reliance Communication at Rs4,299.13 crore, Tata Teleservices at Rs7,851.33 crore and Aircel at Rs2,250 crore.
Sharing the analysis of load on telecom operators due to spectrum payment, Prasad had said that companies have option to pay in parts and the annual load on telecom operators would be around Rs5,300 crore.
Telecom operators are required to make upfront payment between 25-33% depending on the kind of spectrum purchased by them and rest in 10 yearly installments after two years of moratorium.
“At the current average annual inflation rate of 6-7%, it seems to be a considerably hefty sum, further hiking up the tariffs significantly," COAI said.
It said that the Indian mobile telephony industry, in terms of costs, has been investing in spectrum prices which are above the international average and operators in India pay nearly 60-70 times the cost of spectrum in other countries.
“The government also seems to have missed out on the element of interest on the debt that needs to be raised to meet the current spectrum requirements of the industry and spectrum purchases to be made in the future," COAI said.
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