With major telecom operators and telco bodies already crying foul over TRAI recommendations on spectrum price, the research firm Ernst&Young has hinted that telecom tariff will go up by 26 paisa only if cost of licence and cost of spectrum to be auctioned are taken into account.
The Empowered Group of Ministers is scheduled to meet in two days time to decide on the spectrum price in light of the TRAI proposals.
"TRAI's assessment does not include the cost of license extension in addition to the cost of spectrum to be auctioned. Taking into account these two factors only, EY-COAI estimates that the impact on cost per minute will be more than six times the 4.4 paisa ( for FY'13)," Partner in member firm of EY Prashant Singhal said in its analysis of spectrum base price recommended by telecom regulator TRAI.
The report prepared by telecom industry body COAI and EY has claimed that TRAI has made false assumption while calculating impact of spectrum price on telecom tariffs.
"Trai has done simple calculation to arrive at cost impact. It has divided the amount of spectrum to be auctioned and divided it by total number of minutes being used by all telecom subscribers which is incorrect," Partner for Advisory service at E&Y Bharat Bhargava said.
He added that Trai missed to consider spectrum quantity that is being used to support 332 minutes of telecom network used by a subscriber in a month where the revenue comes from only outgoing minutes.
"So one factor of TRAI getting low number is due to less spectrum being put in numerator," Bhargava said.
The report said that said that TRAI has assumed that minutes of usage for telecom services by subscribers will grow around 160 per cent over a period of 20 years (2012-2032) which is contrary to historical trends, which indicate that MOU per subscriber have been falling over the last few years.
The report also said that industry reports indicate that an average tariff increase of around 20 per cent by leading Indian operators in second quarter of 2011 resulted in a sharp decline in MOU in the range of 2.6 to 6.9 per cent," the report said.
It said that TRAI assumption of MOU per subscriber will grow 84 per cent during the 20 year period, is in contrast to the declining trend seen over the last 3-4 years.