Mobile operators label TRAI's tariff revision analysis as "flawed"

The Cellular Operators Association of India (COAI) Friday lashed out the telecom regulator's analysis effects on costs, tariffs and financial returns, saying it was flawed and inconsistent with market realities.

"The analysis provided by TRAI is flawed, non-transparent and inconsistent with the market realities," COAI said in a statement.

"The TRAI's objective behind the exercise appears to be a pre-determined answer to an already arrived-at conclusion and an attempt to defend its earlier position on the matter," it added.

TRAI has changed its assumptions on the growth of total minutes.

According to COAI, it increased the growth rates to 15 percent, 14 percent and 11 percent, in the first three years as against its assumptions in the past paper, dated April 23, 2012 where it was assumed to be 10 percent for the first three years.

"This change in assumption has led to a substantial decrease in rate per minute in the new analysis," COAI said.

"The increases in tariff, as a result of higher cost, could result in lower usage by subscriber, this will further lower the total minutes of use. Also, since subscribers are expected to grow at 6 to 7 percent as per TRAI, total minutes cannot grow at 14 to15 percent, it added.

COAI also called TRAI calculation of EBITDA as erroneous.

"The impact due to CAPEX, OPEX, cost of spectrum and interest charges needs to be assessed and taken into account. TRAI assumes the cost increase is marginal while revenue growth is substantial."

According to the industry body the other issues needed to be considered are: cost of financing the initial years of losses, cost of subscriber addition that has been on the rise and capex for increased capacity.