Industry

Vodafone Idea, Airtel to hike tariffs

Distress call: The telecom industry, under severe financial stress, has been demanding a relief package. P.V. Sivakumar

Distress call: The telecom industry, under severe financial stress, has been demanding a relief package. P.V. Sivakumar   | Photo Credit: P.V. Sivakumar

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No word on quantum of increase in rates from Dec., move follows financial impact of AGR ruling

Reeling under the impact of the Supreme Court’s ruling on adjusted gross revenue (AGR), Vodafone Idea and Bharti Airtel on Monday announced that they will be increasing tariffs from December, although both telcos did not specify the quantum.

Vodafone Idea Limited (VIL), India’s second largest telco by number of subscribers, has decided to increase the tariff from December 1, 2019, due to the acute financial stress in the telecom sector.

“To ensure that its customers continue to enjoy world class digital experiences, Vodafone Idea will suitably increase the prices of its tariffs effective December 1, 2019,” Vodafone Idea said in a statement without elaborating on the quantum of increase.

However, the telco reiterated its commitment to play its due role in realising the vision of Digital India by continuing to provide seamless mobile services to customers across India despite posting a loss of ₹50,921 crore for the second quarter, the highest in India Inc.

Explained | Vodafone and Airtel's historic losses
 

“The acute financial stress in the telecom sector has been acknowledged by all stakeholders and a high level Committee of Secretaries (CoS) headed by the Cabinet Secretary is looking into providing appropriate relief,” the statement said, adding that mobile data charges in India were by far the cheapest in the world even as the demand for mobile data services continued to grow rapidly.

Vodafone Idea shares on the BSE gained 21.47% at ₹4.47 on Monday, as investors anticipate government relief for the sector.

“Building on its largest spectrum footprint and by accelerating its network integration, VIL is speedily expanding both its coverage and capacity and is well on track to offer 4G services to 1 billion Indian citizens by March 2020,” the statement said adding that the company would continue to actively invest in making its network future-fit by embedding new age technologies and launching new products/services to cater to the evolving needs of its over 300 million customers.

Bharti Airtel’s tariff hike announcement comes close on the heels of the company posting a quarterly net loss of ₹22,830 crore for the July-September period

“The telecom sector is highly capital intensive with fast changing technology cycles that require continuing investments. It is, therefore, extremely important that the industry remains viable to support the vision of Digital India,” the company said in a statement.

It added that Airtel would ‘appropriately increase’ price offerings in the month beginning December.

Currently, a Committee of Secretaries headed by the Cabinet Secretary is examining the financial stress in the sector, and is likely to soon recommend measures to mitigate it.

“While continuing to provide affordable tariffs to customers, it would balance the needs of the company to remain viable and thereby continue to invest in the much needed digital infrastructure and maintain the quality standards required by our customers,” the company said.

‘Prices unsustainable’

Bharti Airtel has for long been pitching for an increase in telecom tariffs stating that the current prices were “unsustainable.”

“We understand that Telecom Regulatory Authority of India is likely to initiate a consultation for bringing rationality in pricing in the Indian mobile sector which has been operating at prices that have been eroding the viability of the sector,” it added.

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Printable version | Dec 13, 2019 6:14:55 PM | https://www.thehindu.com/business/Industry/vodafone-idea-airtel-to-hike-tariffs/article30009363.ece

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