The Cellular Operators Association of India (COAI) is of the view that the rise in tariffs due to high spectrum payment costs would be about 12 per cent-15 per cent. COAI has also refuted the Department of Telecommunications’ (DoT) estimate of impact of recently concluded auctions on mobile tariffs, of 1.30 paise per minute.

According to COAI, DoT has not factored in inflation in its estimates, which is inevitable over a long period of 20 years. Apart from this, the government has also not factored in the element of interest on the debt that needs to be raised to meet the current spectrum requirements of the industry and spectrum purchases to be made in the future.

COAI has further stated that the industry presently incurs an expenditure of almost $7-8 billion a year on purchase of equipment. This is also expected to increase as a result of the revised licence conditions to roll out networks to the block level and gram panchayat level in the rural areas. Therefore, a hike of 1.30 paise per minute in tariffs will not be sufficient to address the industry’s financial issues.