Mobile tariffs likely to go up further, says Sunil Mittal

The country’s largest private telecom player, Bharti Airtel, today hinted that mobile tariffs may increase further due to the rising operating costs.

“The pressure on this industry will be acute since the operators have to serve the rural markets as well as low-end customers, who use only voice calls and text messages,” said Sunil Mittal, chairman, Bharti Airtel at an industry event.

He said the correction in tariffs was required to compensate for the rural operations and the cost of operations had gone up exponentially.

Indian cellphone users have been enjoying the lowest tariffs in the world for the last two years. However, due to high competition and tariff war, which was unleashed by new telecom players, the margins and the profits of the operators have taken a hit.

The service providers are also reeling under huge pressure due to high debt taken for acquiring third-generation (3G) and broadband wireless access (BWA) spectrum in the auction last year.

Bharti, Vodafone Essar and Idea Cellular had recently increased their prepaid tariffs in almost all circles by 20 per cent. Airtel was the second private telecom operator to increase tariffs after Tata Docomo, which raised the prices in one-two circles two months back.

Subsequently, Vodafone Essar, Idea Cellular and Reliance Communications had also increased the prices in most of the circles.

The Telecom Regulatory Authority of India (Trai) had sought explanation from operators who had increased tariffs.

Currently, operators have to notify Trai of any change in the tariff plan, introduction of new plans as well the changes in the prices within 30 days.

At the same event, minister for communications and information technology Kapil Sibal spoke for the need to consolidation in the telecom industry. The department of telecommunications (DoT) is working on a new telecom policy 2011, which will talk about mergers and acquisitions for the players apart from other things.

"It's time for us to consolidate the industry. We can't afford 12-13 players in a circle. I think spectrum can be shared and I don't think there is a need for over-regulation for this," he said.