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NEW DELHI: Mobile phone users could see their phone bills rise by 10-15% in coming months, analysts estimate, anticipating that telecom operators may resort to an increase in call rates to be able to pay nearly Rs 1.10 lakh crore to the government for the spectrum they have just bought.
"I don't rule out a minimum 10% increase in tariffs," said Rajan Mathews, director general of the GSM industry body COAI. The auction was structured in a way to ensure maximum revenue, he said, adding, "This will put inevitable pressure for an upward revision in call and data tariffs."
Some experts said the tariffs could go up by 15%, increasing the annual revenue of the industry from nearly $30 billion (about Rs 1.86 lakh crore) to about $34.5 billion (Rs 21.4 lakh crore).
"It could take another six months but operators will have to raise tariffs to meet the debt requirements," said Prashant Singhal, global head for telecom at professional services firm EY.
Most of the increase in tariffs could come from voice, he said, as it still constitutes over 75% of the core revenue for the sector. Analysts, however, said that the increase in call rates would need to be spread over time due to existing competitive pressures in the industry and the impending launch of telecom services by Reliance Jio Infocomm.
Carriers have had to keep rates stable or even lower call rates in the recent quarters to retain or add subscribers. Even as the government did not reveal the details of the auction proceeds, the additional debt is expected to significantly increase the finance costs, assuming that the operators facing licence renewals did win back their spectrum.
According to experts, the escalation in debt servicing costs will force telecom operators to increase tariffs.
What compounds the problem is that the top four operators, Idea Cellular, Vodafone, Bharti Airtel and Reliance Communications have already weeded out discounts from their networks.
"Hence, there is very little room left for improving the realization without a hike in headline tariffs," said Romal Shetty, the telecom head at KPMG.
Hemant Joshi of Delloitte Haskins and Sells said that the auctions will increase the debt burden of the industry by 70-80% of the spectrum price paid. "Balance sheets would get further leveraged and profitability and cash flow would be adversely impacted in servicing of principle and interest and amortization of spectrum cost," he added.
http://m.timesofindia.com/tech/tech-news/Mobile-call-rates-could-rise-by-10-15-in-coming-months/articleshow/46698696.cms