It is believed that telecom tariff will go up by 10 to 15 %

Telecom tariffs are likely to go up in the coming months considering the aggressive bidding by operators to regain spectrum in their existing circles.

The bidding war has resulted in a windfall gain of over Rs. 1.09 lakh crore for the government and debt heavy telecom operators would pass on the additional burden on consumers to recover their investment, said analysts.

It is believed that telecom tariff would go up by 10 to 15 per cent post spectrum allocation. To absorb the extra outgo on account of spectrum fee, the operators need to earn ARPM (Average Revenue Per Minute) of 45 paise as compared to 40-41 paise currently, officials said. However, due to competitive pressure, the hike may not be across the board, they added.

“Tariff will definitely go up. But how much, only market will determine,” said a senior official of a telecom company adding “it should be in the range of 10 to 15 per cent.”

In the past telecom operators had resorted to tariff hikes on several occasions both in voice and data and hikes were based on their competitive strengths in specific circles, analysts said.

“Now, faced with the prospect of bidding aggressively to regain the spectrum which they held, the telecom operators are unlikely to absorb the impact of higher cost of spectrum, especially in the circles where they are in a strong position and are likely to ultimately decide to go for tariff hikes,” said analysts at CARE Ratings.