Mobile tariffs have to go up to meet high cost of spectrum following the aggressive bidding in the just concluded auction that fetched a record Rs 1.09 lakh crore to the government, industry bodies said on Wednesday.
The spectrum auction, which came to a close after 19 days of aggressive bidding on Wednesday, helped the government garner commitment of Rs 1,09,874 crore from operators.
"The auction was designed to extract maximum from telecom operators else why would someone create scarcity of spectrum.
Financial and cost structure of industry has been completely altered.
Consequently tariff will have to be increased to meet commitment to government," industry body COAI Director General Rajan S Mathews told PTI. COAI represent all major telecom companies -- Airtel , Reliance Jio Infocomm, Vodafone, Idea Cellular , Aircel and Telewings (Uninor) -- that participated in the auction.
When asked about few takers for much-hyped 3G spectrum, Mathews said, "Why would anybody bid for 3G at high price.
You know that you will be left with option to pay minimum equal to what you pay in this auction for next round." Former Secretary General of industry body AUSPI, SC Khanna, said, "All big companies, they are debt-ridden.
If price of spectrum has gone up, which is the raw material for operators, the only choice they have is to marginally hike tariffs." He added that this would not have a major impact since "subscribers are now accustomed to these changes like that in case of petrol".
Sanjay Kapoor, former Bharti Airtel CEO, said some telecom operators have increased spectrum in their kitty post closure of the auction.
"The challenging task ahead will be to focus on expanding infrastructure and enhancing customer experience. Customer experience has definitely dipped in the last few months and that has to be looked into," Kapoor, who is the Chairman of Micromax at present, said.
Operators like Airtel and Idea Cellular have a tougher job ahead, he said. "Idea and Bharti are listed, while Vodafone isn't. So, these two companies are answerable to shareholders here...
If Vodafone has spent more than these guys, then Vodafone has clearly garnered more spectrum which means they are creating more capacity.
This might lead to a little shift in market share in the future," he said. The total value of spectrum in four bands of 800 Mhz, 900 Mhz, 1800 Mhz and 2100 Mhz put for auction at base price stood at around Rs 82,000 crore.
The spectrum price in many parts of the country has gone up by over two-folds compared to base price fixed by government.
Bharti Airtel stock price
On March 25, 2015, Bharti Airtel closed at Rs 394.85, up Rs 0.55, or 0.14 percent. The 52-week high of the share was Rs 419.90 and the 52-week low was Rs 289.80.
The company's trailing 12-month (TTM) EPS was at Rs 28.61 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 13.8. The latest book value of the company is Rs 166.93 per share. At current value, the price-to-book value of the company is 2.37.
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