New analysis shows telecom tariff to rise at least by 26 paise

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 paise ( 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 analysis comes in back drop of steep spectrum base price of Rs 3,622 per unit of airwaves to be auctioned recommended by TRAI. This price has earned sharp criticism from industry.

Inter-ministerial panel at Department of Telecom,the Telecom Commission in its recommendation to EGoM has said that balance needs to be struck between spectrum price and three other critical factors — revenue to government,tariff to consumer and viability of investment and continued attractiveness of the sector while taking decision.

The Commission asked TRAI to come up with analysis on impact of spectrum price recommended by it in each of 22 telecom service area and re-look at the points made by industry.

The report jointly 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.