On Sunday, Airtel and Vodafone Idea increased the tariffs for their pre-paid customers from December 3 with the hike ranging between 10% and 45%. Both telecom players have also made the minimum monthly entry plan expensive, hiking it from Rs 35 to Rs 49. Reliance Jio said that it will be increasing the tariffs on its ‘all-in-one’ plans by 40% from December 6.
Airtel and Vodafone Idea have kept their post-paid customers out of the tariff hikes, considering they are already high-paying users and on an average pay around Rs 499 per month.
The tariff hikes impact voice calling in a big way as customers are now likely to get limited minutes (under fair usage policy or FUP) while calling customers of other networks. For example, on Vodafone Idea, a Rs 299 charge for 28 days will give 1000 minutes free on calls to other networks, beyond which 6 paise per minute will be charged. Airtel also said that FUP will apply to all its ‘unlimited calling’ plans.
Voice calls will, however, continue to be completely free when customers call someone on the same network.
The price hikes come after a period of nearly three years, or since September 2016 when Reliance Jio had unshackled the business financials of the industry by introducing highly-aggressive tariff plans that included unlimited free voice and dirt-cheap data tariffs.
Airtel and Vodafone Idea had said on November 18 that tariffs will be going up from December as the cash-strapped loss-making companies take steps to “remain viable” in view of their poor financial positions and the steep statutory and government payment obligations on them (a major burden coming in after the Supreme Court’s Adjusted Gross Revenue – AGR – ruling of October 24).
Analysts welcomed the hikes, saying it is a “must” to keep the Indian telecom businesses viable, and added that there is space for even more tariff revisions. “We are still amongst the cheapest tariff markets in the world,” Sanjay Kapoor, former CEO of Airtel India, who analyses the sector closely, told TOI.
However, he added that customer expectations from the network will go up after the tariff revisions. “Companies will need to improve customer experience, or else there will be retaliation. A lot of investment needs to be done in 4G and telecom fibre to make it video grade. In-building usage experience is still weak, and there are also massive dark spots,” Kapoor said.
The companies said that the tariff revisions will help them make fresh network-improvement investments. “Our new mobile plans offer tremendous value to our customer. Airtel will continue to make large investments in emerging technologies and digital platforms to deliver world-class experiences,” Shashwat Sharma, Chief Marketing Officer of Bharti Airtel, said.
The Sunil Mittal-run company said that its new plans represent tariff increases in the range of 50 paise per day to Rs 2.85 per day. “In addition, Airtel provides exclusive benefits as part of the Airtel Thanks platform, which enables access to premium content… device protection, anti-virus protection and much more.”
Jio also said that it will continue to strengthen its network. “While remaining committed to the ultimate interest of the consumer, Jio will take all necessary steps to help sustain the telecom industry.”
Jio is the only profit-making telecom business in the industry, and was also the least impacted by the Supreme Court’s AGR judgement. On the other hand, Vodafone Idea suffered a record loss of nearly Rs 51,000 crore in the second quarter of this fiscal, while Airtel’s loss was at Rs 23,045 crore. The AGR order asks telecom companies to pay up Rs 1.47 lakh crore to the government in three months, with Vodafone Idea required to pay Rs 53,038 crore and Airtel Rs 35,586 crore.
Industry watchers say the current tariff hikes will not be sufficient for the companies to meet their dues, and “their needs to be a special package on the AGR dues for them to be able to survive”.
Recommended by a high-powered Committee of Secretaries, the government had recently given a Rs 42,000 crore two-year moratorium on payment of spectrum dues to the telecom companies to leave cash in their hand.
Airtel and Vodafone Idea have now approached the top court for relief on its AGR verdict after the government refused to intervene on the matter.