The age of free data and calls is finally over. After Reliance Jio started charging 6p/min for calling other operators, Vodafone Idea and Bharti Airtel have announced to increase tariffs from December 1. Notably, this is the first hike in almost three years, which may help the telcos to ramp up revenue and operating income for the two lossmaking telecom companies.
However, both the companies have taken a bold decision as the rise in charges may trigger some of its customers porting to RJio. The development has come days after Vodafone Idea and Airtel reported huge losses.
Bharti Airtel posted a net loss of Rs 23,045 crore loss in the quarter ended 30 September, only its second quarterly loss in 14 years. Things became worst for Vodafone Idea as the company posted a massive loss of Rs 50,921 crore in the same quarter. Shockingly, this is the highest ever quarterly loss registered in the history of India Inc. The two companies have reported such huge losses after making a provision for the Supreme Court's ruling on the repayment of Adjusted Gross Revenue (AGR). Besides, the Vodafone Idea's liability could jump further if the government chose to use a different method for calculating the dues.
Charges to be hiked by 30-45% in the near future
Meanwhile, the amount of hike in the charges have not been confirmed, as per a report published in the Economic Times, it could go as high as 30-45 per cent in the near term and more than 300 per cent from the existing rates over next two years. Moreover, the companies are yet to announce the modalities on how would hike work out for the customers who have validity beyond December. The Indian telecom sector after witnessing double-digit growth in the last decade registered major losses and mergers after the brutal entry of Reliance Jio in the market in 2016.
In a press statement, Airtel announced, "We understand that Trai (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." Vodafone Idea which had announced the price hike before Airtel said, "Mobile data charges in India are by far the cheapest in the world even as the demand for mobile data services continues to grow rapidly … To ensure that its customers continue to enjoy world-class digital experiences, Vodafone Idea will suitably increase the prices of its tariffs effective 1 December 2019."