The huge investment India’s mobile operators are making in spectrum will lead to higher tariffs for mobile services next year, warned the Cellular Operators Association of India (COAI).
India’s spectrum auctions, after eight days of bidding, had attracted bids worth INR1.02 trillion ($16.27 billion) from eight operators. Only about 86 per cent of the total spectrum being auctioned off has been provisionally sold, so prices are expected to go higher.
Bharti Airtel, Idea and Vodafone have been competing fiercely to retain spectrum in the 900MHz band since their licences expire over the next year. This band, under new rules, can also be used to offer 3G services.
The Economic Times quoted COAI director-general Rajan Mathews as saying: “In the longer term, tariffs have to increase as the input costs of operators have been rising.”
He said that rates won’t rise immediately but will take nine months to a year.
Barclays noted that the spectrum payments will have a limited impact on operators’ balance sheets in the near term as the payments are on a deferred basis, the Times said.