Telecom industry body COAI on Monday termed the base price for spectrum auction fixed at Rs 14,000 crore as too high saying that this would result in 37-49 paise per minute increase in call tariffs.
"The Cabinet's decision of fixing the reserve price for re-auction of 2G spectrum at Rs 14,000 crore for 5MHz will impact tariffs to the tune of 37-49 paise per minute," Cellular Operators Association of India (COAI) said in a statement.
Not only this, the total industry debt will rise to anywhere between Rs 3.7 lakh crore to Rs 5.4 lakh crore as per the two separate scenarios provided by TRAI in it analysis on impact of spectrum price, COAI said.
The Cabinet on Friday set the base price at Rs 14,000 crore for 5 Mhz spectrum in 1800 Mhz band and Rs 18,200 crore for 5 Mhz spectrum in 800 Mhz band.
The base price approved by Cabinet was 22% lower than Rs 18,000 crore minimum rate suggested by the Telecom Regulatory Authority of India (Trai). It is, however, 7 times higher than the price new companies had paid in 2008 to get spectrum from the then Telecom Minister A Raja.
COAI said that reserve price per MHz per population in India (on purchasing power parity basis) of Rs 19.68 is enormously high as compared to Rs 1.06 that Ofcom (the telecom regulator of the United Kingdom).
"For the 800 MHZ band, Ofcom has announced a reserve price that works out to Rs 3.18 per MHz per population while that of India stands at Rs 25.58 per MHz per population. Hence, it occurs that the Indian operator will have to shell out 1,700 per cent more than the UK operator" COAI said.