Bharti & Idea take the call to ring in change in tariffs

Jan 24 2013, 01:43 IST
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SummaryThe country’s top two mobile operators, Bharti Airtel and Idea Cellular, on Wednesday began a calibrated approach towards raising tariffs for voice calls in the prepaid segment, which accounts for more than 85% of their revenues.

at Rs 118.50.

Headline tariffs in the industry currently vary from circle to circle and operator to operator, and ranges from 1.2 paise per second to 1.5 paise per second. But what actually comes into the hands of the operators is a very small amount, ranging between 27 paise per minute for newer operators and 43 paise per minute for incumbents. Tariffs at which customers are acquired are much higher, ranging between 43 paise per minute to 60 paise per minute. Operators are now trying to raise the realisable amount.

Explaining the kind of changes done in the tariffs at Bharti Airtel, an official said that in some circles full talk time was being offered in recharge vouchers for as low as Rs 30, which has now been raised to Rs 50-60. Further, minutes given in special value vouchers have been reduced in some cases. For instance, if a special value voucher for Rs 71 came with 135 minutes, it could have been revised to Rs 97 for 125 minutes. Similarly, on a smaller denomination, a special value voucher for Rs 22 for 50 minutes could have been altered to Rs 22 for 40 minutes. In some cases, the number of days the voucher remains valid has been brought down. For instance, for the Rs 45 voucher, the validity could have been brought down in some cases from 14 days to 10. Through such measures, the company would be able to increase its realisable tariffs.

Mobile tariffs in India are the lowest in the world and operators have been often stated that increased costs require tariffs to go up. In an interview with FE recently, Bharti Airtel's outgoing CEO Sanjay Kapoor had said, “Tariffs have eroded by 40% in the past 10 successive quarters while costs on the other hand have increased significantly. If you were to ask me, prices should have increased as of yesterday.”

Under the regulatory norm, operators have forbearance with regard to tariffs and can make changes in it without any prior approval from the Telecom Regulatory Authority of India. However, after making changes they have to file the tariffs with the regulator within a week's time.

Why have the operators chosen now to make such adjustments in their tariff plans after a tariff war in 2009, which saw a race towards the bottom? Analysts and company officials explain that with gross additions in the industry coming down, the pressure on

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