'Pressure on Telcos to Raise Tariffs'

Published: 28th March 2015 06:00 AM  |   Last Updated: 28th March 2015 04:47 AM   |  A+A-

NEW DELHI: A day after Union Minister for Telecom Ravi Shankar Prasad ruled out the possibility of a hike in mobile tariffs, global trade body GSMA, said high spectrum prices may put pressure on telcos to raise tariffs.  The telecom spectrum auction ended on Wednesday after 19 days of fierce bidding fetching the government over Rs 1.10 lakh crore.

stock.JPG“Unfortunately, these high prices will put increased financial pressure on operators and ultimately have a negative impact on consumers, reducing the value derived from the spectrum and hindering future economic growth and social gain in India,” said Tom Phillips, Chief Regulatory Officer, GSM Association (GSMA).

According to Prasad, the yearly load on telecom operators was estimated about Rs 5,300 crore and 1.3 paise per minute (mobile phone) call.

The forum urged the government to enable a business and regulatory environment build around trust and certainty, which will facilitate fresh investment by mobile operators to expand mobile broadband services throughout the country.  Currently, India offers one of the cheapest tariffs for voice calls across the globe.

Meanwhile, Fitch Ratings said successful bidders ability to invest in building networks will be restricted after paying for spectrum. “India’s biggest telecom spectrum auction to date, which raised $17.7 billion, will exert pressure on telcos’ balance sheets and cash flow, and limit their ability to invest in capex over the medium term,” Fitch said.

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