KOLKATA: Subscribers in Andhra Pradesh, Maharashtra, Gujarat, Rajasthan, UP-East and UP-West are likely to be most affected by the expected tariff increases as the cost per minute for a call in these circles has increased the maximum - between 7 and 13 paise - following the auctions, say industry experts and analysts.

India's top three telcos - Bharti Airtel, Vodafone India and Idea Cellular - spent top dollars in these service areas to renew 900 MHz spectrum in the recently concluded airwaves sale, which will force them to pass on the additional cost to subscribers. Most though expect the tariff hikes on calls to be spread over months, limiting the impact on a user's wallet.

For instance, market leader Bharti Airtel, which is paying 103 crore for spectrum in Andhra Pradesh for a 20-year period, will now have to fork out a staggering 6,127 crore as renewal cost of its 900 MHz airwaves in the state, again for 20 years. No 2 carrier Vodafone India's payouts towards such spectrum renewals in UP-East and Rajasthan have also skyrocketed to 4,343 crore and 4,535 crore respectively, from 45.3 crore and 32.3 crore respectively, based on 2001 entry fee structures. Third-largest operator Idea Cellular faces a daunting task in Maharashtra, Gujarat and UP-West where it has to cough up as much as 6,957 crore, 3,365 crore and 3,693 crore towards spectrum renewals respectively, against current levels of 189 crore, 109 crore and 30.6 crore. Accordingly, a top executive of a leading mobile operator believes consumers in Andhra Pradesh, Maharashtra, Gujarat, Rajasthan, UP-East and UP-West are likely to be the first to see a nearly 20% jump in call rates over the next three to six months as "the impact of high spectrum renewal costs for incumbents is among the highest in these circles".

So much so, the increased cost per minute for a call is over 13 paise in Rajasthan, while it hovers around 9 paise in UP-East, UP-West, Maharashtra and Gujarat. In Andhra Pradesh's case, it is 7 paise a minute.

At press time, Bharti Airtel, Vodafone India and Idea Cellular did not reply to ET's queries.

US brokerage Morgan Stanley feels "the (telecom) industry needs a tariff hike of at least 5 paise (or 9%) to be profit-neutral, post auctions, especially since 55% of Ebitda (earnings before interest, taxes, depreciation, and amortisation) is at risk due to higher interest and depreciation" outflows.

Analysts at HSBC agree that Idea Cellular will need to improve its voice realized rates by 9% to recover spectrum costs in the medium- to long-term, while Bharti Airtel would need to improve its voice realisations by at least 8%. "Unlike in the past, we do not see any risk of other telcos not following market leaders as focus appears to be shifting away from market share to profitability," Bank of America Merrill Lynch said in a note to clients.

Telecom Regulatory Authority of India Chairman Rahul Khullar had recently said the aggressive bidding witnessed in the recently concluded spectrum sale would increase telco costs by 12-15%. The recent no-holds-barred clash for 900 MHz spectrum saw the bid levels surge 93% over the base price. In India's costliest spectrum sale yet, Idea Cellular was the biggest spender putting in bids worth 30,307 crore, followed by Bharti Airtel ( 29,130 crore) and Vodafone India ( 25,810 crore). Airtel, Vodafone and Idea collectively committed just over 85,000 crore, or 77% of the 1.098 lakh crore total auction proceeds.