PThe era of cheap mobile tariffs is likely to end as Thursday’s Supreme Court order takes out new players who brought down call rates to as low as one paisa per second.
The balance sheets of the traditional telecom firms, including Airtel and Vodafone, were already under pressure due to the huge amounts they had to pay in the 3G auction, for which they are now likely to compensate by raising tariffs. Bharti Airtel, Vodafone and Idea, among others, had hiked call rates last year by 20 per cent due to pressure on their margins.
“Tariffs were bound to go up even before the ruling. If the new operators now have to win licences through an auction bid and get back spectrum, there will be costs. Some of this will have to be passed on to the consumer,” said KPMG India’s telecom head Romal Shetty.
Top telecom analyst Mahesh Uppal, director of consultancy firm Com First India, said while tariffs will go up, they will not get prohibitively high.
While the Supreme Court ruling cancelled the licences of new players, the old players are also likely to come under pressure as DoT is planning to impose a one-time charge on them for holding excess spectrum over 6.2 Mhz.
Also, the licences of most old telecom players will come up for renewal soon, and they will have to pay market prices for the spectrum they currently hold.
Telecom Regulatory Authority of India has warned it will keep a strict watch on mobile tariffs, and plans a white paper on whether to intervene to fix call rates.