The era of low tariffs for Indian consumers seems to have ended as major telcos — Vodafone Idea Limited (VIL), Bharti Airtel Limited and Reliance Jio — have hiked tariff by up to 40% for prepaid customers.
While VIL, and Sunil Bharti Mittal-led Bharti Airtel have decided to hike the tariffs with effect from December 3, Mukesh Ambani’s Reliance Jio has decided to effect the hike from December 6.
90% of market
The three telecommunication giants together account for over 90% of India’s 1.18 billion mobile subscribers, with the market share of around 30% each split evenly among them.
“New plans will be available across India starting 00:00 hours of December 3, 2019,” a Vodafone Idea statement said.
Bharti Airtel’s statement read: “Airtel’s new plans represent tariff increases in the range of a mere 50 paise/day to ₹2.85/day and offer generous data and calling benefits.”
Both Vodafone Idea and Bharti Airtel announced new prepaid plans starting with options of 2 days, 28 days, 84 days and 365 days validity and prices starting from ₹19 and going upto ₹2,399. Reliance Jio is yet to announce its new plans.
Reliance Jio’s new tariffs will be priced 40% higher but promise to offer 300% more benefits to its customers.
“Jio will be introducing new all-in-one plans with unlimited voice and data. These plans will have a fair usage policy for calls to other mobile networks. The new plans will be effective from 6th December 2019,” the company said in a statement.
The hike in tariffs comes after VIL, and Bharti Airtel posted record quarterly losses of ₹50,922 crore and ₹23,045 crore respectively due to an adverse Supreme Court ruling on the adjusted gross revenue (AGR).
Both Vodafone Idea and Bharti Airtel also have an outstanding debt of over ₹1 lakh crore each.
According to government data, the liabilities in the case of Bharti Airtel add up to nearly ₹35,586 crore, of which ₹21,682 crore is licence fee and another ₹13,904.01 crore is the SUC dues (excluding the dues of Telenor and Tata Teleservices).
Vodafone Idea has an estimated liability of ₹44,150 crore post the apex court order, and made provisioning of ₹25,680 crore in the second quarter this fiscal.
Commenting on the price hike, Chief Marketing Officer of Bharti Airtel Shashwat Sharma said, “Our new mobile plans offer tremendous value to our customers and are backed by a superior network experience on Airtel’s nationwide 4G network.”
“This is just the beginning. The telecom tariffs need to almost double in the coming year to support a three-player market and a healthy telecom sector,” Paras Bothra, President (Equities) for Angel Stock Broking told The Hindu.
VIL shares on BSE closed up 3.17% at ₹6.83 in a firm Mumbai market on Friday, valuing the company at ₹19,626.27 crore while Bharti Airtel shares closed up 1.28% at ₹442.30, valuing the company at ₹22,6,986.67 crore. RIL shares closed down 1.84% at ₹1550.90 on Friday, valuing the company at ₹983140.16 crore.
Plea for relief
Industry bodies Confederation of India Industry (CII) and Federation of Indian Chamebrs of Commerce (FICCI) have written to Union Finance Minister Nirmala Sitharaman seeking relief for telecom companies over the ₹1.47 lakh crore statutory dues.
CII and FICCI heads have in separate letters asked the Finance Minister to address “precarious” financial position of telcos saddled with a debt of ₹7 lakh crore and ensure robust competition for vibrancy in the sector.
CII president Vikram Kirloskar in a November 19 letter sought revisting the current revenue-sharing business model - where the government is paid a predecided share out of the income generated from using scarce natural resource, and replacing it with “competitive and transparent” model that also “address the possible adverse impacts on banks” having exposure to sectors with such business model.
The letter stressed that telecom services are a ‘raw material’ for the rest of the economy serving as a productivity-enhancer for many other sectors. “A robust vibrant ecosystem of TSPs is critical for some of the key nation business initiatives of the government of India, including the drive towards a less cash-based economy and the larger Digital India programme. In essence, a vibrant telecom sector is in the national interest.”
FICCI president Sandip Somany’s letter says, “The recent developments on the Adjusted Gross Revenue (AGR) dues of Telecom Service Providers (TSPs), have triggered a great deal of concern not only to the seriously-affected TSPs, but also others who are part of the overall telecom eco-system.”
Mr. Somany said the apex court ruling will not only lead to the collapse of the telecom sector but will also have a cascading effect on several other sectors including power, steel and railways.
His letter urged Ms. Sitharaman’s urgent intervention, saying the debt-ridden industry has no appetite left to invest in networks and future technologies.
The old and new tariff for Bharti Airtel
|Price Validity Offers||Price Validity Offers|
|₹19. 2 Days (Unlimited Calling, 150MB Data)||₹19. 2 Days (Unlimited Calling, 150MB Data)|
|₹129. 28 DAYS (Unlimited Calling, 300 SMS, 2GB)||₹148. 28 days (Same)|
|₹448. 82 Days (Unlimited Calling, 100 SMS/day, 1.5 GB/D)||₹598 ( 84 days)|
|₹998 336 Days (Unlimited Calling, 3600 SMS, 12GB)||₹1498 365 (24 GB data)|
|₹1699 365 days (Unlimited Calling, 100 SMS/day, 1.5 GB/D)||₹2398 (1.66 GB data/d)|