Amidst all the talk of an impending rise in telecom tariffs in the last week, Thursday’s verdict by the Supreme Court of India in the 2G case has further strengthened that possibility.
Just last week, Airtel’s Sunil Bharti Mittal had warned that Indian consumers will have to be prepared for higher tariffs if the government goes ahead with a proposal to charge for extra 2G spectrum held by telecom companies.
“If on the voice side the spectrum is going to be charged at an exorbitant price be prepared for high tariffs,” Mittal had told an Indian TV channel.
A day after his statement, a front-page report in the Economic Times stated that mobile bills are set to grow around 20% to 30% this year due to the problems faced by telecom companies for allegedly under reporting of revenues and other violations.
The ET report, quoting a Reliance Communications executive, states that the telecom industry needed higher charges to service its $55.6 billion debt. The executive also added that except for the top three telcos all other operators are losing $161.6 million to $202 million per quarter.
Thursday’s verdict, which cancelled 122 2G licenses, states that the telecom companies whose licenses stand to be cancelled can buy the spectrum at market price if they want to continue using that spectrum. The Supreme Court has given the telecom regulator four months to look into the matter and make recommendations for fresh auctions, a news report stated. This may lead to consolidation in the Indian telecom sector as some of the existing players whose licenses have been cancelled may not participate in these 2G auctions.
The 2G verdict may also lead to a huge number of consumers opting to port their numbers to other networks.
