The Current status of Indian Wireless Industry is as follows,
1. subscriber additions has fallen significantly
2. churn rate remains high
3. pricing pressure continues to prevail due to competition, regulator’s intervention and increase in service tax
4. regulatory uncertainties are not coming to an end and
5. operators are unable to pass the high cost to subscribers, leading to continuous fall in profitability;

Industry has been talking about tariff increase post 2G auction but we believe tariff hike in near term remains unlikely due to multiple factors explained above. If Reliance Infotel or Uninor bid at the current price (which is still very high, in our view), it would restrict tariff hike from incumbents post 2G auction because they will have to match the pricing when their spectrum is up for renewal.

If Uninor participates in upcoming 2G auction it would not lead to a tariff hike as it has only low end prepaid subscribers on its network, which would not welcome tariff increase at low quality of network.

When Mobile Call Rates are Expected to Go up in India ?
Incumbents would increase tariffs during the course of renewals and not at one go, unlike the last fiscal. This time, tariff hikes would be gradual and timed with spectrum renewal.

3G tariff (which still remains at significant premium to 2G data prices), high cost of 3G handsets and weak network quality would continue to be a barrier for incremental subscriber addition on network. Expect further room for cut in 3G tariffs, otherwise operators would continue to lose money on spectrum and network investment.