Govt makes billions at mobile consumers cost, tariff to go up

With heavy debt burden of Rs 3.5 lakh crore the telecom firms will compromise on services

GN Bureau | March 26, 2015


#mobile tariffs   #telecom   #airtel   #Vodafone   #idea celluar   #uninor   #reliance   #spectrum   #auction  

The government is happy that it made a killing by selling spectrum. The spectrum was sold at about 68 per cent premium, at Rs 1,09,874.91 crore ($17.6 billion) and the telecom companies borrowed heavily to finance this buying.  With debt burden close to Rs 3.5 lakh crore there is bound to be heft hike in tariff to pay for interests.  So, who will benefit from this auction and government chest-thumping?

"Telecom industry which was already saddled with nearly Rs 2.5 lakh crores is now going to helplessly see it mount to nearly Rs 3.5 lakh crores," Assocham Telecom Council Chairman T V Ramachandran has said in a statement.

Ramachandran said that "consumer tariffs are bound to rise significantly but, due to the level of hyper-competition present here, the increase would not be anywhere near adequate to cover the higher cost".

The cash outgo may restrict roll out of networks and affect the basic objectivity of sector to provide telecom connectivity to people. This means there would be congestion in call connection and dangers of call droppings will be frequent.

At the base price fixed by the government, the spectrum value was Rs 65,463.40 crore and many telecom companies had to participate in this auction to retain their licences. Some comes came in to increase their acquisitions.

Idea Cellular, Airtel, Vodafone and Reliance Communications had to hold on to their operational circles as per their licence, while Reliance Jio, Tata Teleservices, Telewings (Uninor) and Aircel pitched for additional spectrum.

Even then about 11 per cent remained unsold in 800 Mhz, 1800 Mhz and 2100 Mhz (3G) band.

"While this is no doubt beneficial for addressing the fiscal deficit, the outcome does raise some important concerns not only for the industry but also, more importantly the consumer - the 'Aam Aadmi', and for the national economy," Ramachandran has said.

Meanwhile, the supreme court on Thursday allowed the government to finalise the spectrum auction bids and collect the initial payment amounting to Rs 28,000 crore out of Rs 1.09 lakh crore from the successful telecom companies before March 31.

The court, however, stated that the final allocation will be subject to the decision of the court after hearing all parties, starting April 16.

The bench headed by Justice Dipak Misra passed the order after hearing Attorney General Mukul Rohtagi who submitted that cash payment of Rs 28,000 as immediate initial payment will help the budget and it is in the budget proposals.

The court noted the arguments of the telecom companies that they were challenging the “entire design of the auction”, as their counsel P Chidambaram put it.  They wanted the earlier order suspending the finalization of the bids to continue, but the court observed that “We cannot block so much money. Let the government collect the money.”

Comments

 

Other News

NTPC adds highest ever capacity; records highest single day generation

  With commissioning of 800 MW unit at Kudgi in Karnataka, 250 MW unit at Bongaigaon in Assam and 20 MW at Bhadla solar in Rajasthan, the total installed capacity of National Thermal Power Corporation (NTPC) group has reached to 49,943 MW.   The 12th plan cap

Why do we need Aadhaar?

 Aadhaar is arguably one of the most convoluted public policy interventions in India’s history. It has been more than eight years, yet there is little clarity on the exact purpose of the biometric-based unique identification project.  Let me take you through an event which I witne

AAI signs MoU with Daman and Diu admin for maintenance of Diu airport

The airports authority of India (AAI), a Miniratna PSU, has undertaken operation, development and maintenance of Diu airport from Diu administration.    A memorandum of understanding demonstrating the responsibilities was inked on March 20 between the union terri

PSU performance: Better than expected

Central public sector enterprises (CPSEs) have done quite well despite facing headwinds, according to the Public Enterprises Survey (2015-16) that was tabled in parliament on March 21. The net worth of all the CPSEs have gone up and the overall net profit has zoomed. Their contribution to the cen

National Health Policy: Old prescription, new date

After much discussion and pondering over for more than two years, the cabinet has approved a new National Health Policy, scrapping the old one which was formulated in 2002. The government aims to increase the public health expenditure to 2.5% of the GDP by 2025. The policy formulated in 2002 aimed

It’s traumatic, says African student

  “We have requested more security from the government of India and the Uttar Pradesh government,” said Abdou Ibrahim, senior adviser, Association of African Students (AASI)  following an attack on four students from Africa in Greater Noida, Uttar Pradesh. &n

Video

यूपी में नकल करने वालों की अब खैर नहीं

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter