Cellular Operators Association of India (COAI), an industry association of GSM mobile service has said that mobile tariffs may go up soon as a result of the upcoming spectrum auctions, which is expected to push up their debt burden to about Rs 3,00,000 crore.
The auction of for the spectrum is supposed to be conducted in February next year.The telecom sector is already under a debt of around Rs 2,50,000 crore. COAI Director General Rajan S Mathews stated-
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. Banks are also unwilling to lend to telecom operators due to high debt burden. Also the telcos have to spend on network infrastructure.
Trai recently suggested a reserve price of Rs 2,138 crore per MHz of 1800MHz spectrum for 20 circles, around 10% higher than the reserve price fixed for the February 2014 auctions. In the 900MHz band, reserve prices for the 18 circles add up to Rs 3,004 crore, 1.5 times the price of 1800MHz.
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.