Having shelled out thousands of crores to acquire spectrum in the recently concluded 2G auction, telecom majors say they have no choice left but to pass on the burden to the customer. So get ready to pay fatter mobile bills.
The final 2G auctions may have given the government a big reason to smile, but telecom companies, at their end, are not feeling as euphoric.
The top three operators - Bharti Airtel, Vodafone & Idea Cellular along with Reliance Jio placed aggressive bids and invested a total of USD 9.9. bn or Rs 61 thousand crore to buy 2G spectrum in the auction. But spending big more-often-than-not pressurises the balance sheet and shrinks margins.
Bharti Airtel's newly appointed MD says the country's largest telecom operator may have no option now but to hike call rates to make up of for it.
Gopal Vittal, md & ceo, Bharti Airtel said: “I think there is no other way for this industry other then prices to go up, voice pricing has to go up with these kinds of investments. With the debt in the industry at an overall level, I think there is no question that voice prices have to go up. My own view is that you will see over the next 2 to 3 years sustained increase in voice prices.”
But then again, given the intense competition in the telecom sector, Vodafone feels hiking tarriffs is easier said than done.
According to Marten Pieters, CEO, Vodafone India said:” If take Mumbai for example, there are few guys who bought spectrum in Mumbai - Bharti and me. But all the other guys are still sitting on the same cost levels as they sat on before. So I can not of course alone raise my prices in Mumbai because I paid a lot in Mumbai. it is not really directly linked to spectrum but it is of course over time linked to return on investment.”
Whereas, Idea, on its part, says the company will work to bring down promotional offers and will contain costs but has not ruled out tarriff hikes either
Himanshu Kapania, md & ceo, Idea Cellular said: “ARPU has to grow at an average of 8 to 10% and revenue has to grow by 20% and we leave no stone unturned to achieve this and if in this process tariff has to go up that is there.”
Experts though believe rather than opting for tariff hikes alone, most players will now start gearing up to raise funds through ECBs as well as other domestic routes to cut down debt by as much as possible.
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