INDIAN phone company chiefs on Thursday (May 3) slammed proposals for a sharp hike in the price of mobile spectrum, saying it would raise calling tariffs and potentially destroy the fast-growing sector.
In a rare show of unity in the fiercely competitive industry, top executives of Bharti Airtel, Vodafone, Idea Cellular, and other leading mobile companies joined forces to denounce the proposed price increase.
“It would be a disaster. These plans will ring the death knell for the Indian telecom industry,” Sanjay Kapoor, president of the Cellular Operators Association of India (COAI) told a news conference in New Delhi.
The high prices are “completely unsustainable” for an industry that must make huge investments to roll out networks in remote areas, said Kapoor, who is also chief executive of Bharti Airtel, India’s largest mobile company by subscribers.
The Telecom Regulatory Authority of India (TRAI) suggested last month a base price of Rs36.22bn ($678m/£418.87m) for one megahertz (MHz) of pan-India spectrum – 10 times the price at which 2G licenses were allocated in 2008.
The industry says company operating costs would increase and calling rates would rise by as much as 100 per cent for customers who now enjoy the world’s cheapest tariffs of less than a US cent a minute.
The heads of mobile phone companies also met government ministers on Wednesday (May 2) to press their case. The left-leaning Congress-led coalition government will make the final decision on the price.
The spectrum is to be sold by auction after the Supreme Court earlier in the year cancelled 122 permits awarded in 2008 to eight operators on the grounds that the sale process was underpriced and corrupt.
The court ordered the government to reallocate the airwaves through a transparent competitive bidding process.
The former telecom minister in charge of the 2008 sale, who was at the heart of one of the biggest graft scandals in independent India’s history, is in jail facing trial on charges of corruption.
