Telecom Secretary M. F. Farooqui has pointed out that tariffs may not rise as a result of the recently concluded spectrum auction as operators will be kept in check by increasing competition.
Mr. Farooqui’s comments, however, come less than a few weeks after Vodafone India boss Marten Pieters had said the point had come where the company would have to increase its tariff levels every year depending on cost levels.
“I am not the operator... I’m the regulator. But there are two elements or factors that will help keep the mobile tariffs from rising,” Mr. Farooqui said, on the sidelines of the Mobile World Congress trade fair here. The first, he said, was that increasing competition would help keep tariffs down. “This will make sure that operators will not do anything that will reduce their market share.” The second, he said, was that new types of technology would allow operators to lower costs and also offer a wide range of different services.
Eight telecom companies, including Bharti Airtel, Vodafone and Idea Cellular, the biggest three in the country, bid a combined Rs 61,162 crore in the spectrum auction held earlier this month. The government offered airwaves in the 1800 MHz and 900 MHz bands.
Telecom operators have been cutting back on freebies and discounted minutes to maintain profitability and have been saying that the mobile industry needs annual tariff increases to sustain themselves.
“We have had declining tariffs for 18 years; this cannot be sustained forever. We believe the point has come where we will have to increase our tariffs every year, depending on cost levels,” Vodafone India Managing Director and Chief Executive Officer Marten Pieters said recently.
Mr. Pieters said the industry has not yet recovered from the excesses of the 2010 auction and the February auction, combined with others expected in the next couple of years, will worsen the industry’s health.
However, Mr. Farooqui said the operators are not required to pay the full amount bid for spectrum in one go.
“Let’s not forget that we are not asking for down-payment,” he said. Operators can make part-payment now and the rest over a period of time, he said.
Winners of spectrum can make a partial upfront payment by March 3 and pay the rest in 10 yearly instalments. If the bidders opt for deferred payments, the government will get about Rs 18,296 crore in this financial year.