Confronted with intense competition and unprecedented statutory dues, Bharti Airtel and Vodafone Idea on Monday announced a hike in mobile phone call and data charges from December saying the increase was warranted for viability of their business.
The telecom regulator will wait for operators to report their new tariffs to the authority before taking a view on whether the revised pricing is within the regulatory framework, according to a Trai source. Confronted with intense competition and unprecedented statutory dues, Bharti Airtel and Vodafone Idea on Monday announced a hike in mobile phone call and data charges from December saying the increase was warranted for viability of their business. The two, however, did not quantify the increase in rates but said that the hike will be effective beginning next month.
A senior Trai official told PTI that the regulator will wait and watch to see the finer details of the announcement. “Let them report the tariffs, and we will see. Also, the tariffs are under forbearence,” the official said. Another official said that as things stand now there is no move to initiate any consultation on floor price. On Monday evening, Vodafone Idea, in a statement, announced plans to raise tariffs for the first time in 3 years only to be followed by a similarly-worded statement minutes later from Airtel.
Vodafone Idea and Bharti Airtel, the two large telecom operators, last week had reported a combined loss of Rs 74,000 crore for the second quarter ended September 2019, mainly on account of statutory dues arising from the recent Supreme Court order on adjusted gross revenue (AGR). The apex court has upheld the government’s position on including revenue from non-telecommunication businesses in calculating the annual AGR of telecom companies, a share of which has to be paid as licence and spectrum fee to the exchequer. The ruling over statutory liabilities had prompted a rush for provisioning by telecom companies.
While Vodafone Idea posted a loss of Rs 50,921 crore — the highest-ever quarterly loss by any corporate in India — Airtel reported a loss of Rs 23,045 crore for the September quarter. “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 had said in a statement on Monday.
Bharti Airtel statement had said the telecom sector is highly capital intensive with fast changing technology cycles that require continuing investments and therefore, extremely important that the industry remains viable to support the vision of Digital India. “Accordingly, Airtel will appropriately increase price offerings in the month beginning December,” Airtel had said.