Published: Wed, November 20, 2019
Markets | By Otis Pena

Singtel associate Airtel, Vodafone to hike mobile tariffs in India; shares rally

Singtel associate Airtel, Vodafone to hike mobile tariffs in India; shares rally

"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", said Vodafone Idea in a statement to Business Standard.

After tariffs remained subdued for the last three years since Jio's entry, finally Airtel and Vodafone announced plans to hike them after the Supreme Court asked them to follow DoT's AGR computation method on revenue sharing with the government.

As on September 30, 2019, Vodafone Idea had a subscriber market share of 31.73 per cent, Reliance Jio had a market share of 30.26 per cent, and Bharti Airtel of 27.74 per cent.

The possible liquidation of Vodafone Idea will be one the fastest declines of an industry major and once one of India's top companies in terms of revenues, assets and market capitalisation. "Accordingly, Airtel will appropriately increase price offerings in the month beginning December", Bharti Airtel said in a press release.

The Sunil Bharti Mittal led firm made provision of amount aggregating Rs 28,450 crore after the AGR verdict.

With the new plans, both Airtel and Vodafone could see a loss in subscriber count as Jio continues with its aggressively priced tariff plans and offers.

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The move came after the telecom sector watchdog Telecom Regulatory Authority of India said it may reconsider its proposed plan to end such charges by January 2020.

Vodafone Idea on Thursday took a one-time charge related to a US$4 billion (S$5.4 billion) demand from the government, leading to a net loss of 509 billion rupees (S$9.64 billion) in the three months through September.

The acute financial stress in the sector has been acknowledged by all stakeholders and a high-level government panel is looking into providing appropriate relief, Vodafone Idea said on Monday. "We believe telcos will largely focus on raising tariffs for smartphone users (rather than feature phone users) as 1) smartphones users could afford Rs 10-20 tariff hike without any meaningful impact on usage; 2) Feature phone users are very price sensitive and could churn off - as evident with launch of minimum recharge of Rs 35", said BofAML in a report.

According to a Live Mint report, telecom prices in India are now the cheapest in the world.

"Despite the staggering growth in data-consumption and 4G coverage across the country, there are still over 40 crore Indian consumers who have not benefitted from the advent of the latest technologies".

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.

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