Spectrum sale cleared, phone tariffs may rise
India cleared on Wednesday a mega telecom spectrum auction plan that can fetch the government an estimated `5.6 lakh crore, but industry leaders cautioned that high prices could eventually force companies to raise tariffs.
The move will make more spectrum — radio waves that carry telecom content — available for operators to offer high-speed data, help reduce call drops, bolster the government’s fiscal position, but could hurt companies’ fragile balance sheets by forcing them to borrow more.
“This will be the largest auction to date,” finance minister Arun Jaitley said during a press briefing after the cabinet headed by Prime Minister Narendra FOR CONSUMERS Modi approved the spectrum auction proposal. The government was confident that the prices will not be a hurdle for the auctions to sail through.
“The appetite for India’s telecom sector is very big,” communications and IT minister Ravi Shankar Prasad said.
More than 2,300MHz of airwaves will be on the block for telecom operators in seven bands — 700MHz, 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz and 2,500MHz. Based on their panIndia reserve price, the revenues can be as much as `5.6 lakh crore.
A decision on the so-called spectrum usage charge (SUC), a fee that telecom firms have to pay the government every year, has been deferred with the cabinet referring it back to the sector watchdog.