Vodafone, Airtel Users Brace For Tariff Hike From December
Indian telecommunication majors- Bharti Airtel and Vodafone India have decided to increase their tariffs from next month, for the first time in over a decade.
The development comes a day after both the companies posted record losses in the September quarter. The hike is expected to help shore up revenue and operating incomes for the lossmaking telcos. As of now, the telecom companies have not revealed how much will be the tariff hike.
“The telecom sector is highly capital intensive with fast-changing technology cycles that require continuing investments. It is, 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,” Bharti Airtel said in a press release.
Airtel incurred a loss of Rs 23,045 crore for the second quarter of 2019-20 while Vodafone Idea incurred Rs 50,922 crore loss in the same quarter.
The announcement by Vodafone Idea comes days after its Group Plc Chief Executive Officer Nick Read expressed dissatisfaction on the way the Indian government is foisting higher taxes and charges on the telecom operators.
According to a Live Mint report, telecom prices in India are currently the cheapest in the world. Both the companies have been advocating higher prices and lower government levies for improving the health of the telecom sector, which is currently bogged down by huge debt and intense competition.
Both the firm faced a significant loss post the Supreme Court judgement last month that backed the government’s stance of including non-core items in adjusted gross revenue.
This judgement is a massive setback for all the telecommunication companies, as they now have to pay dues worth Rs 1.33 lakh crore within three months. This ruling left the two facing over Rs 80,000 crore in dues and forced them to make provisions for the payments.
Both the companies stocks spiked after the latest announcement. Vodafone’s stock rose by 30 per cent while Airtel’s rose by 6 per cent. However, increasing the tariff may lead to customers switching to Reliance Jio.