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Telecom tariff could rise 90 paise on TRAI recommendations

Telecom tariff could rise 90 paise on TRAI recommendations

By Press Trust of India | Updated: 5 June 2012 10:54 IST

Highlights

Telecom tariffs in metros will go up by 90 paise if government accepts the spectrum price recommended by sectoral regulator TRAI, says PwC.

Telecom tariffs in metros will go up by 90 paise if government accepts the spectrum price recommended by sectoral regulator TRAI, consultancy firm PricewaterhouseCoopers (PwC) said today.

"The recommended spectrum price of TRAI will lead to tariff hike of 90 paise in metros. All India average will be 34 paise. TRAI did not consider basic facts while arriving at price impact on tariff," PwC India's Executive Director Mohammad Chowdhury told reporters in New Delhi.

Telecom industry body COAI and PwC have jointly done the assessment of spectrum auction recommendations of Telecom Regulatory Authority of India (TRAI). The regulator has recommended a minimum price of Rs 3,622 crore for a unit of spectrum. TRAI has also recommended doubling of this amount for airwaves that is being used by incumbent GSM operators at the time of renewal of their licence.

Considering all the factors, TRAI said that impact on telecom tariff will be around 4.4 paisa in Financial Year 2013. "TRAI did not consider many factors while making calculations. It did not calculate the impact of price on the basis of outgoing minutes which generate revenue for telecom operators. Also it ignored the trend which it pointed out in its own report," Chowdhury said.

PwC said that TRAI has assumed that subscribers will grow for a typical operator by 40 per cent between FY2012 to FY2013 and 258 per cent increase by FY 2032. "By calculation this implies that minutes of usage (an indicator of telecom services consumption) per subscriber increases by 83 per cent. This is not in line with current trends wherein there has been a year-on-year reduction in MOU per subscriber between 2008 and 2011," Chowdhury said.

Speaking on the behalf of Cellular Operators Association of India (COAI), Rajat Mukarji of Idea Cellular termed TRAI method of calculating spectrum price in comparison to 3G price "fundamentally flawed". "The (TRAI) calculations are fundamentally flawed. We are looking at what TRAI has come up with in its calculations and we re-computed all the calculation on the actual live ground situation," Mukarji said. Chowdhury said that the industry is under huge debts and the recommended price will pose a challenge on seeking loan from banks.

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Further reading: PwC, TRAI, Telecom, Telecom Tariffs

Telecom tariff could rise 90 paise on TRAI recommendations

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