TRAI's proposal may lead up to 64% tariff hike, says UBS
The recommended spectrum price by sector regulator TRAI will lead to tariff hike between 47 to 64 percent, Swiss research firm UBS Investment Research has said.
New Delhi: The recommended spectrum price by sector regulator TRAI will lead to tariff hike between 47 to 64 percent, Swiss research firm UBS Investment Research has said.
"Our analysis of TRAI recommendations on spectrum pricing suggest that outgoing tariffs need to increase by 47 to 64 percent to compensate for high spectrum prices," UBS Investment Research report by analysts Suresh A Mahadevan and Varun Ahuja said.
The analysts have assumed 60 paisa per minute as current rate offered by telecom operators for their calculations.
TRAI had suggested a base price of Rs 3,622 crore for one megahertz (MHz) for pan-India spectrum. This is around 10 times higher than the price at which 2G licenses bundled with 4.4 MHz spectrum were allocated in 2008 under the then Telecom Minister A Raja.
According to TRAI, a minimum of 5 Mhz spectrum should be allotted, which means that pan-India airwaves in 1800 MHz band will cost Rs 18,100 crore.
The analysts estimated that impact of the high spectrum price will translate into a 28 paisa per minute hike in tariff if services are provided through 1800 MHz band only.
The report also said that there will 38 paisa per minute increase in tariff if services are provided using both both 900 and 1800 MHz spectrum bands.