Will customers end up paying for the spectrum auction in terms of higher tariffs?

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We may soon see a price increase in our regular cellular tariffs, warned the telecom operators across India. The spectrum auction and the price reserved for the same will be a huge amount and covering the current debts with the new debts will be a head scratcher for the operators!

Spectrum Auction India

"This increasing debt load will place increasing margin pressures on operators due to higher interest expenses," said Rajan S Mathews, director general at the Cellular Operators Association of India (COAI). "These additional costs will have to be passed on to consumers through higher tariffs" said Matthews. Else the government should reduce the spectrum prices, he added reports E.T

In February government is expected to auction limited quantity of spectrum in the bands of 900 MHz and 1800 MHz. "Holding auctions as is will set the industry back by three to four years," Rahul Khullar, chairman of Telecom Regulatory Authority of India (TRAI), has said.

Leading operators like Vodafone, Bharti Airtel and Idea Cellular may spend a hefty price to save their licences in their specific circles, keeping in mind the licenses will expire in 2015 and 2016.

Good part is that the Government is expected to reveal the roadmap of the spectrum in the 700 MHz band before conducting the upcoming auctions for the 900/1800 MHz band. TRAI also made it clear that the auctions should commence only once there’s enough visibility on the availability of the 2100 MHz spectrum which are generally employed for 3G services. The reserve prices will be 10% premium than the last bid that won the auctions.

The 2015 Spectrum Auctions might turn out to be the biggest auction as it is expected to generate a whopping Rs. 2 Trillion for the state exchequer. In the hindsight, the revenue earned by the government in November 2012 and March 2013 auctions was less than what they expected.

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