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3G services will not come cheap: Sunil Mittal - Mr.Bhat - 07-11-2010

Market leader Bharti Airtel today cautioned that 3G mobile services will not come cheap, especially for subscribers in metros, as service providers had to pay dearly for spectrum.

"Take the example of Delhi itself, or Mumbai. The amount for spectrum that has been charged is close to Rs 3,500 crore each... Just to recover license fees and input cost, it works out to be Rs 700-900 per month," Bharti Group Chairman Sunil Mittal said.

Amid highly aggressive bidding for 3G spectrum, Bharti Airtel won 13 circles, including Delhi and Mumbai, paying Rs 12,295.46 crore, the highest among service providers.

The company could not achieve the objective of a pan-India 3G foot print as the prices rose beyond a reasonable level due to various factors like the auction format, a severe shortage of spectrum and also ensuing policy uncertainty, it had said.

Asked by when the service would be launched by Bharti, Mittal said, "Some time later this year. We will wait for the spectrum allocation, which is promised in September, a few months after that."

In fact, not only Bharti, but no operator could bag the pan-India 3G spectrum. The three leading mobile operators -- Bharti, Vodafone and Reliance Communications -- managed to win 3G spectrum in Delhi and Mumbai, which could lead to a tariff war in these two metros.

In the rest of the circles, especially in the C-category, the tariffs may not be very high.

Elaborating on the rationale for differential tariffs, Mittal said "My view is that certain circles, it would be circle dependent, like C circle and all will not be very expensive, but in circles that have gone very high in the 3G auction, price will have to adjust for itself."

"The pricing of subscriber tariffs have to be based on the input cost. Any industry relies on input cost and here, the input cost is spectrum and it has gone high," he said.

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