In defiance of the government’s dismissal of reports of rate increases last week, the Cellular Operators Association of India (COAI) said on Tuesday that mobile phone tariffs could go up by 12-15 per cent because of high spectrum prices.
“…the industry’s analysis of the financial implications of the [spectrum] auction indicates an increase of more than 12-15 per cent on the present tariffs, to make up for the cash outflows of the operators,” COAI said in a statement.
Last week, Telecom Minister Ravi Shankar Prasad said a simple calculation, based on TRAI data, showed that if at all required, tariffs would not increase by more than 1.3 paise per minute.
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Seeking a clarification on these calculations, COAI said the government seemed to have failed to factor in inflation and the interest on debt the operators would have to pay for funds raised to acquire spectrum in the auction that ended last week. It said the operators would have to pay 13-14 per cent of their revenues as licence fee and spectrum usage charge.
“While we wait for the answers from the government, we maintain that owing to the increased financial burden, the industry’s cost structure will change drastically and the operators will not be left with much choice but to increase the tariffs to meet the financial commitments to the government,” it said.