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.

The 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. Both companies said that while the headline tariff — the pulse/second rate — has not been increased, some promotional offers, discounts and free minutes have been withdrawn in some schemes in some circles. By doing this the operators would be able to increase their realisable rates. Simply put, what the operators have broadly done is while not raising the price of prepaid vouchers, they have either reduced the talk-time on them or decreased the validity period.

Explaining the strategy and the rationale behind the hike, Hemant Joshi, partner, Deloitte Haskins & Sells, said: “Price hikes may be gradual. Let’s assume an operator is generating 1 billion minutes per day. An increase of 1 paisa per minute would increase annual revenue by R360 crore and an increase by 2 paise would increase annual revenue by R720 crore. Being a volume game, small increases can benefit the sector.”

“There is no change in the headline tariff. In most circles we have reduced promotional benefits and free minutes on both acquisition and existing usage,” a Bharti Airtel statement said.

“We are committed to enhance value for our customers through continued investments in network, technology, customer experience and life enriching services,” the statement said.

Idea Cellular did not issue any statement but the company confirmed withdrawing certain promotional discount schemes for new subscribers. “These schemes were valid for new subscribers for a period of six months. As the period ends, we would not extend them. However, there has been no increase in headline tariffs,” a company official said.

Though Vodafone India, the country's third major operator, hasn't increased tariffs as yet, it welcomed the move by the other two and indicated that it may follow suit. “We welcome the price rationalisation for bonus cards, special tariff vouchers and free minutes from our competitors. We feel these were inevitable given the sharp input and energy price increases in the country. We are studying these moves individually across all our circles. We are inclined to follow to maintain consistency and competitive position though we haven’t decided on our precise circle-wise moves,” the company said in a statement.

The development saw Bharti's share close up 4.44% on the BSE at Rs 367.25 while Idea's closed up 0.72%

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