Why You May Have to Pay More for Your Calls and Mobile Data

Industry body COAI has said mobile tariffs may go up soon as telecom operators are expected to pass on to customers the burden of spectrum cost they will incur in the upcoming auction.

The auction of airwaves is likely to be conducted in February next year.

"Definitely there will be an upward pressure on tariffs as the debt burden of telecom players will increase post auctions, they have to pass on the cost to customers," COAI director general Rajan S Mathews told PTI.

He said operators have to pay around Rs. 40,000 crore for the spectrum even if the airwaves would be sold at reserve price in 900MHz and 1800MHz bands.

"From where the money will come? Banks are also unwilling to lend to telecom operators due to high debt burden. Also the telcos have to spend on network infrastructure. So, after paying such huge amount for spectrum only, they have to pass the burden to customers," Mr Mathews said.

Telecom sector regulator Trai had suggested a 10 per cent higher base price for the next round of spectrum auction in the 1800MHz band.

The Telecom Regulatory Authority of India (Trai) had recommended a price of Rs. 2,138 crore per MHz for the 1800MHz band and Rs. 3,004 crore per MHz for the premium 900MHz band.

The spectrum auction will be conducted for radiowaves in 900MHz held by existing telecom operators Airtel, Vodafone, Idea Cellular and Reliance Communications through their licences that are expiring in 2015-16.

In the 900MHz band, about 184MHz of spectrum is likely to be auctioned. In 1800MHz, government has proposed to auction 104MHz of spectrum which included spectrum held by licences that are expiring in 2015-16 and unsold airwaves in February auction.

Telecom operators have been cutting back on freebies and discounted minutes to maintain profitability. Analysts say this trend may continue as they have to pay for the fresh spectrum purchases.

After the last auction held in February this year, Vodafone India CEO Marten Pieters had said the telecom industry in India has reached a point where the tariffs need to increase every year to sustain itself.

The February 2014 auctions fetched about Rs. 62,162 crore.

2G spectrum auction flops

2G spectrum auction flops; less than Rs, 10K crore bids received

Press Trust of India, November 15, 2012

The much-talked about 2G mobile phone spectrum auction on Wednesday virtually flopped with just Rs 9,407 crore being garnered in the process contrary to the high valuation estimated by the CAG in its damning report of the government two years ago.The auction, which lasted just two days, got total bids worth Rs. 9,407.64 crore, Telecom Minister Kapil Sibal told reporters at the end of the bidding, which was a far cry from the 35-day bidding for the 3G spectrum in 2010 that got Rs. 67,719 crore.
The government was targetting a minimum of Rs 28,000 crore from the sale of 2G spectrum in the GSM band and the tepid response may upset its efforts to meet the revised fiscal deficit target of 5.3 per cent of GDP. Overall, the government had budget Rs 40,000 crore as revenue from spectrum sale this fiscal.
Sibal refused to comment on the CAG's estimation of Rs. 1.76 lakh crore as the loss to the exchequer in giving away spectrum on first-come-first-serve basis in 2008.
In an apparent dig at the CAG, he merely said, "the facts are before the nation and quite clear."
Going by the 3G auction price, the current sale should have fetched Rs. 1 lakh crore but "what we have got is Rs. 9,407 crore... so this is a market and that is how it plays itself out."
None of the five companies bidding for the spectrum made any offer for pan-India airwaves for which the reserve price was set at Rs. 14,000 crore, a rate considered high by the industry.
Sibal said in all 101 out of the 144 blocks of spectrum on offer got bids.
Metro cities of Delhi and Mumbai, which accounted for 40 percent of the base price of Rs. 14,000 crore for 5MHz of 2G spectrum, drew no bids.
Olympus said Monday it had swung back into the black in the first half of its fiscal year, reporting a $100 million net profit on the sale of subsidiaries unrelated to its core business, while the key medical systems unit posted an operating profit.
Sony and its domestic rivals are all struggling due to the strong yen and falling prices of television and other products amid stiff competition from South Korean, Chinese and other makers.
Moody's last week downgraded Sony's credit rating for the second time in a month, the latest blow to Japan's electronics sector where embattled Sharp has seen its own credit rating slashed to junk.
The global ratings agency chopped Sony by one notch to Baa3 with a negative outlook, just above junk grade.