Calling for a reduction in the base price for the next spectrum auction,
telecom companies have said higher costs may lead to rates for calls,
text messages and other services rising by up to 50 percent.
value of spectrum should not be too high, which will inevitably result
in significant increase in consumer tariffs, unsold spectrum and
consequently, no revenues for the exchequer," Bharti Airtel said.
telecom regulator had recommended an about 11-fold increase in the base
price for spectrum from the amount paid by operators in 2008.
Airtel, Vodafone India and Loop Mobile, whose licences expire in 2014
and may see their spectrum auctioned under a refarming proposal, have
told the Telecom Regulatory
Authority of India that the move will lead to a significant increase in mobile tariffs.
call rates have seen an increase of up to 100 percent over the past two
years. At present, mobile call rates range between 90 paise and Rs. 1.20
Airtel said a study conducted by the Cellular
Operators Association of India and PwC in May 2012 stated that consumer
tariffs would go up by 26 paise if the regulator's recommendations of
May 2012 were accepted.
Loop Mobile, which has services in Mumbai,
said the industry may have to invest about Rs. 550 billion on network
modification under refarming and spend an additional Rs. 118 billion
annually on operational expenditure.
"New capex will be required
to produce new base stations, apart from expenses related to procurement
of new towers and write-off costs.This shall in turn have a negative
impact on subscriber tariffs and industry estimates suggest a net
increase of at least INR 0.5 per minute," Loop Mobile said.
government had set a pan-India reserve price for 3G spectrum at Rs. 3,500
crore in 2010. At last year's auction, the reserve price was Rs. 14,000
crore for 5 Mhz of spectrum. Vodafone India suggested that the regulator
reduce the spectrum base price by up to 84 percent for 2G GSM spectrum
from the level fixed for the March auctions. Telenor-led Telewings has
suggested keeping the base price at Rs. 1,650 crore, the level set in
On the other hand, companies led by the Ambani brothers have opposed any reduction in spectrum price.