Telecom tariffs would rise 37 to 49 paise perminute led by the cabinet's decision to fix the reserve price for the 2Gspectrum auction at Rs.14,000 crore per 5 MHz in the 1,800 MHz band, anindustry lobby for GSM operators said Monday.
The Cellular Operators Association of India (COAI), which is also examininglegal options against the government, said it will finalise its steps by theend of this week.
"We are examining all the legal options to challenge the policy decisionsof the government and are currently talking to our lawyers. We will be able totake a decision on that by the end of this week," COAI director generalRajan Mathews told IANS.
COAI also said this decision would lead to a rise in the industry debt toanywhere between Rs.3.7 lakh crore and Rs.5.4 lakh crore.
"The cabinet has not given due consideration to the fundamental issue ofunsustainable high reserve prices which will significantly increase costs,thereby invariably increasing the tariffs," the industry body said in astatement.
"No mention is made as to how the industry, that is already highlyleveraged and under a debt burden of Rs.2 lakh crore, will fund the highoutflow on account of auction of 2G spectrum, especially in the wake of thebanking sector's unwillingness to take on more exposure to the industry,"it added.
The final reserve price set by the cabinet is lower than the Rs.18,000 croresuggested by sector regulator TRAI.
According to COAI, the cabinet's decision will severely affect thesustainability of the sector and further add to the investment drought that itis witnessing of late.
It also said Inddia's reserve price is way above the international reserveprice per MHz per population.
The reserve price per MHz per population in India (on purchasing power paritybasis) of Rs.19.68 is enormously high as compared to Rs.1.06 that Ofcom(Britain's telecom regulator) has recently announced for auction of 1,800 MHzband, it said.
The Supreme Court Feb 2 ordered cancellation of 122 licences issued during theregime of A. Raja and asked the government to re-distribute these licencesthrough an auction for which it has set a Aug 31 deadline.
The Empowered Group of Ministers (EGoM) is scheduled to meet Tuesday to decideon the auction timeline. It was earlier scheduled to meet Monday evening.
Though the government has been reiterating that it is making all efforts tomeet the apex court's deadline, industry experts feel that it is likely to seekanother extension.
The Supreme Court had initially given the telecom department four months toconduct the aution while cancelling the licences in February but extended thedeadline to Aug 31.