Mittal indicates tariff hike if spectrum charged

Bharti Airtel, the country's largest telecom operator, today indicated possible rise in call tariffs if the government decides to charge for extra spectrum allocated to opeators.

"If the government decides in their wisdom that this industry needs to be taxed heavily in the form of high spectrum charges, whether its one time or recurring, that has to result in higher tariff regime," Bharti Airtel group Chairman Sunil Mittal said on the sidelines of World Economic Forum.

He further said that India has seen lowest tariffs ever in the world and continues to enjoy those rates because the government was pragmatic in the approach of dealing with spectrum and spectrum charges.

"Now, if the government finally decides that I want higher charges both upfront and on going, the result of that has to flow through your economic rationale. It should be higher tariffs. All we want is certainty," Mittal said.

He added that if the entire country or entire telecom sector is going to pay much higher charges to the government then the tariffs will shoot up.

Telecom Regulatory Authority of India has recommended over six-fold jump in the 2G spectrum price and has left the decision for levying a one-time charge for additional spectrum beyond the contracted limit of 6.2 MHz to the government.

It had recommended that each MHz of additional spectrum, after the 6.2 MHz limit held by operators, should have one-time cost of Rs 4,571.87 crore for all of India.

However, from circle to circle, it would vary and the operators would have to pay only for those areas where they hold extra spectrum.

Apex decision making body of Department of Telecom, the Telecom Commission has recommended to charge for spectrum beyond 4.4 MHz instead of 6.2 MHz.

Most telecom companies including Bharti Airtel have spectrum in access to 4.4 MHz.

"My point is its government's decision. Do they want affordable tariffs and money to the government coffers being balanced or not. Its their decision," Mittal said.

He added that margins of Airtel are under pressure due to high cost of operations.

"In the event there is going to be more load, that is going to put pressure on margins, which would means industry will have to force their hands to raise the tariffs to get the margins back," Mittal said.

He said that tariffs in India are very low at around 44 paisa per minute and increasing it to 55 or 60 paise per minute should not be an issue.

"On an average if you have 43-44 paisa per minute and if that is to go to 55-60 paise, its no boday's case that its not an affordable tariff," Mittal said.