Telecom tariffs likely to go up, industry says

New Delhi, PTI | Updated : 26 March 2015, 12:00 AM

Government raised a record Rs 109,874 crore in the country's biggest and the fiercest auction of telecom spectrum that ended today, triggering fears of hike in call and data rates. 

Incumbents Airtel and Vodafone bid aggressively to protect their businesses as new players like Reliance Jio participated in the auction that lasted 19 days and saw 115 rounds of bidding among eight operators. In two of the spectrum bands, prices jumped by over two-fold in some circles. 

"Today spectrum auction has concluded at Rs 1,09,874 crore. This is highest ever in history of India. The spectrum auction conducted in 2010 brought about Rs 1,06,000 crore which included Rs 30,000 crore payment from BSNL and MTNL. This time all amount is non-BSNL, non-MTNL money," Telecom Minister Ravi Shankar Prasad said. 

Names of the winners, however, have not been disclosed due to court orders. The Supreme Court may tomorrow rule on multiple cases questioning auction guidelines and criteria.

"The auction has ended," a top official said. Sale of airwaves in four bands got bids worth Rs 1,09,874 crore even as 11 per cent spectrum went unsold. At the base price, the value of spectrum in the auction was worth about Rs 82,395 crore. 

The fierce bidding is likely to lead to rise in call, SMS and data charges as operators pass on the cost of spectrum to consumers. 

"The auction was designed to extract maximum from telecom operators else why would someone create scarcity of spectrum.

Financial and cost structure of industry has been completely altered. Consequently tariff will have to be increased to meet commitment to government," industry body COAI Director General Rajan S Mathews told PTI.

Depending on the band, carriers will have to pay as much as 33 per cent of their final bid within 10 days of the auction's conclusion and the rest in 10 annual instalments starting in 2017. The permits will be valid for 20 years. 

Former Secretary General of industry body AUSPI, SC Khanna, said, "All big companies, they are debt-ridden. If price of spectrum has gone up, which is the raw material for operators, the only choice they have is to marginally hike tariffs." 

He added that this would not have a major impact since "subscribers are now accustomed to these changes like that in case of petrol". The auction included airwaves held by nine licences of Idea Cellular, seven each of Reliance Telecom and Vodafone and six permits of Bharti Airtel that were expiring in 2015-16. 

These airwaves mostly included frequencies in 900 Mhz band and 1800 Mhz band.Government also auctioned airwaves in 1800 Mhz band that remained unsold in 2014, and 800 Mhz or CDMA band frequencies that were left after sale in 2013.

First Published: Wednesday, March 25, 2015 11:59 PM
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