Your mobile phone bills will rise by 15% this year, because the Govt is doling out airwaves to mobile phone operators

At a time, when India is on its way to becoming the second largest smartphone market in the world, we were expecting further cuts in mobile tariffs. But, we were wrong. Analysts are anticipating an increase in mobile tariffs in the wake of recent spectrum purchase for which telecom operators are doling out approximately Rs 1.10 lakh crore to the government.

So, how much you would need to pay now? As per an ET report, mobile phone users could see their phone bills rise by 10-15% in coming months.

Since the auction was structured in a way to ensure maximum revenue, this will put inevitable pressure for an upward revision in call and data tariffs, the financial daily reported.

While Rajan Mathews, director general of the GSM industry body COAI, has hinted at 10% hike in tariffs, there are some experts who see mobile tariff going up by 15%.

But this won’t happen anytime soon. Prashant Singhal, global head for telecom at professional services firm EY, thinks, “It could take another six months but operators will have to raise tariffs to meet the debt requirements."

He further told ET, “Most of the increase in tariffs could come from voice, as it still constitutes over 75% of the core revenue for the sector.”

Escalation in debt servicing costs will force telecom operators to increase tariffs, revealed the ET report. It further explained, “What compounds the problem is that the top four operators, Idea Cellular, Vodafone, Bharti Airtel and Reliance Communications have already weeded out discounts from their networks.”

"Hence, there is very little room left for improving the realisation without a hike in headline tariffs," said Romal Shetty, the telecom head at KPMG.

Hemant Joshi of Delloitte Haskins and Sells said that the auctions will increase the debt burden of the industry by 70-80% of the spectrum price paid. "Balance sheets would get further leveraged and profitability and cash flow would be adversely impacted in servicing of principle and interest and amortisation of spectrum cost," he added.