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Telecom tariffs will rise by 12-15%: COAI

The telecom industry on Tuesday took on the Department of Telecom on the impact of the recently-concluded auction on mobile tariffs.

While the DoT has estimated that the impact will not be more than a paisa per minute, the Cellular Operators Association of India said that there would an increase of more than 12-15 per cent on the present tariffs.

“The DoT does not seem to have factored in inflation, which is inevitable over a long period of 20 years as indicated by the Government. At the current average annual inflation rate of 6-7 per cent, it seems to be a considerably hefty sum, further hiking up the tariffs significantly,” the COAI said.

“The government also seems to have missed out on the element of interest on the debt that needs to be raised to meet the current spectrum requirements of the industry and spectrum purchases to be made in the future,” it added.

IT Minister Ravi Shankar Prasad had earlier said that the rise in tariffs was a “misplaced notion” and that “a simple back-of-the-hand calculation based on the telecom regulator’s data shows that if at all required, tariffs will not increase beyond 1.3 paise per minute”.

COAI said the industry already incurs an expenditure of almost $7-8 billion a year on purchase of equipment, which is expected to increase further as a result of the revised licence conditions to roll-out networks to the block level and gram panchayat level in the rural areas.

“Therefore, it is confusing for the industry, that after taking all the factors such as inflation, high spectrum costs, high cost for equipment and substantial regulatory costs, combined with low returns; how a hike of 1.30 paise/minute in tariffs would address the industry’s financial woes, and how it will be a sustainable solution for the industry,” COAI said.

Source: The Hindu Business Line

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