Service tax increased by 20 percent: Service tax is hiked from the current 10 percent to 12 percent. This will have a huge impact on customers as most services, including mobile calls, will cost more. For operators, however, this may not be a good news, as the increase in call rate will in effect reduce per-minute usage per user, thereby impact operator revenue negatively

Commenting on the service tax rate hike, Satya N. Gupta, chief-Corporate Affairs, Telecom Infrastructure Business, Sterlite Technologies, told Telecom Lead, “Afordability of the consumer will come down. It may affect the per minute usage of the operators and may result in to marginal drop in revenue of operators. 20 percent increase in service tax will boost the revenue of government.”

Indian telecom operators profit
to decline 85% in 2011-12

Telecom Lead had reported that profit after tax of Indian telecom services segment is
expected to decline 85 percent in 2011-12, according to India Government’s
Economic Survey.

The report said the significant decrease in profit is mainly
on account of the sharp rise in the industry’s interest outgo and higher
depreciation charges due to the heavy borrowings for acquiring 3G licences and
rolling out 3G services.In India, all operators are reeling under
pressure to improve revenue and profit from 3G services which were rolled out
in the last 18 months. Indian mobile operators paid around 1 lakh crore for
buying both 3G and BWA spectrum in 2010.