The party is over for mobile consumers who have been enjoying the world's lowest tariffs till now.
According to Mr Sunil Mittal, Chairman, Bharti Airtel, mobile tariffs will rise significantly in the coming months. This is because operators are trying to offset the lower revenue from rural markets, where users typically make fewer phone calls than in cities and towns.
“The Indian telecommunications industry is keeping its head barely above the water and needs significantly higher telephone call charges to survive,” Mr Mittal, said at an event organised by the Telecom Regulatory Authority of India.
Though mobile operators in the country still boast of the lowest tariffs, increasing pressure on margins and rising costs have forced service providers to increase price recently. Over the past few months, Airtel, Tata DoCoMo and Reliance Communications have increased tariffs. Mr Mittal's comments indicate that there could be more hikes in the near future.
Mr Mittal added that the Government should be liberal and judicious in allocating spectrum as operators have already paid far too much to obtain spectrum for offering third-generation mobile phone services.
Operators including Airtel, Vodafone and Idea together paid more than Rs 1 lakh crore for buying spectrum for 3G mobile services and wireless broadband in India.
In addition, the Government is looking to also price 2G spectrum, which will put further pressure on the operators' costs. Increasing costs have forced mobile firms to resort to debt to finance network rollouts in rural areas, and paying for 3G/broadband spectrum. This has significantly raised their debt ratios.
At the same event Mr Kapil Sibal, Minister of IT and Communications, said that companies should balance profit making motives with national interest while deciding about tariffs.