Earlier this morning, a report mentioned that Bharti Airtel had implemented headline tariff (direct increase in voice tariff) , however in another report , Airtel clarified that it has not implemented any headline tariff increase.
Following the announcement now validity of Airtel’s recharge coupon will expire after 30 days unlike previous expiration period of 90 days. Similarly, Idea Cellular has also reduced its promotional benefits, without impacting direct voice tariff.
Currently, voice calls constitute around 85% of the sector’s revenues, however call rates in India are some of the lowest across the world, which significantly erodes profits of telecom operators.
Call rates in the country have been consistently falling for the past three years and subsequently Average Revenue per Users (ARPUS) of telcos had declined sharply.
Given such scenario, the move will compensate losses to some extent incur by bleeding telecom companies.
Because of fierce competition, telcos have been extending low call rates and promotional offers to generate new customers sans losing grip on existing ones. Decline in competition with some players withdrew from key circles have also tend Airtel and Idea to cut free calling and freebies.
Earlier in December 2012, Union Telecom Minister Kapil Sibal strongly indicated that roaming charges may be abolished by 2013. The move aims to benefit millions of mobile phone user in the country, but will have serious implication on telcos.
At that time, telecom companies including The Cellular Operators Association of India (COAI) criticized the government’s plans to abolish roaming charges and have warned they would be forced to increase tariffs to offset this losses.
Following the tariff hike from two telecom majors Airtel and Idea Cellular, other telcos expected to do the same. On this news, Airtel’s share price went up by 4.4 % to Rs 367.25 on Wednesday at the BSE.