Vodafone Idea, Airtel tariff hike: Price increase may not help much; check what’s needed

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Updated: November 19, 2019 1:25:11 PM

Even as the move by both Vodafone Idea and Bharti Airtel to increase tariffs on mobile services is positive, the benefits will only be realised in the fourth quarter of the ongoing fiscal, Nitin Soni, Director-Asia Pacific TMT, Fitch Ratings.

Reliance Jio, Vodafone Idea, Bharti Airtel, spectrum dues, Mukesh Ambani Jio, Department of Telecom, spectrum fee, spectrum licence fee, Vodafone Group Chairman Gerard Kleisterleem, Vodafone CEO Nick Read, elecom Secretary Anshu PrakashVodafone Idea and Bharti Airtel on Monday announced an increase in tariff prices from December 1, 2019.

Even as the move by both Vodafone Idea and Bharti Airtel to increase tariffs on mobile services is positive, the benefits will only be realised in the fourth quarter of the ongoing fiscal, Nitin Soni, Director-Asia Pacific TMT, Fitch Ratings told CNBC TV-18. A 10 per cent rise in tariffs can increase the revenues of these companies by $400-500 million, he added. However, it may not offset the substantial unpaid payment in form of AGR, Nitin Soni also said. So, the government needs to provide some relief measures to the distressed sector so as to help them come out of the ongoing financial troubles, he added, saying the levies and taxes paid by Indian telcos stand highest in the Asia Pacific region.

Vodafone Idea and Bharti Airtel on Monday announced an increase in tariff prices from December 1, 2019 — the first such hike in the Indian telecom market since 2012. Most mobile telephone service providers in India, including Bharti Airtel and Vodafone Idea, offer voice and data bundled plans, where the tariff rises progressively in line with the data bandwidth and speed, whereas voice calling is unlimited.

Also read: Share Market LIVE: Bharti Airtel, Voda Idea shares jump on tariff hike announcement; Sensex up

Bharti Airtel and Vodafone Idea tariff hikes come as the Indian telecom industry posted a record quarterly loss. Vodafone Idea posted a loss of Rs 50,921 crore for the July-September quarter, owing to provision for the Supreme Court’s ruling on payment of  AGR dues, even as ongoing brutal pricing war continued to hurt. This was the highest ever quarterly loss posted by any company in India. In the year-ago period, the telco recorded a loss of Rs 4,947 crore. Even Bharti Airtel recorded a loss of Rs 23,044 crore for the quarter ended 30 September 2019 due to Rs 28,450 crore provisions towards AGR.

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