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Vodafone Idea, Airtel to Raise Mobile Service Rates from December Amid Financial Crunch

Vodafone Idea last week reported consolidated loss of Rs 50,921 crore - highest ever loss posted by any Indian corporate - for the second quarter ended September 30.

PTI

Updated:November 19, 2019, 1:23 PM IST
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Vodafone Idea, Airtel to Raise Mobile Service Rates from December Amid Financial Crunch
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New Delhi Faced with intense competition and unprecedented statutory dues, Bharti Airtel and Vodafone Idea on Monday announced a hike in mobile phone call and data charges from December saying the increase was warranted for viability of their business.

First Vodafone Idea in a statement announced plans to raise tariffs for the first time in 3 years only to be followed by a similarly worded statement minutes later from Airtel.

The two, however, did not quantify the increase in rates but said that the hike will be effective beginning next month.

Vodafone Idea last week reported consolidated loss of Rs 50,921 crore - highest ever loss posted by any Indian corporate - for the second quarter ended September 30, on account of liability arising out of the Supreme Court order in the adjusted gross revenue case.

"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," Vodafone Idea said in a statement.

The company at present provides monthly mobile services at starting price of Rs 24 without data, and plans with data service starts from Rs 33 onwards. Airtel monthly plan starts at Rs 24 onward, while scheme with data begins from Rs 35.

Vodafone Idea has last week said that its ability to continue as a going concern is dependent on obtaining relief from the government and positive outcome of the proposed legal remedy, including a review petition before the apex court.

Following the apex court judgement, Bharti Airtel too raised similar concerns.

"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.

Bharti Airtel, which posted the highest ever loss of Rs 23,045 crore last week, said that it understands that telecom regulator Trai is likely to initiate a consultation for bringing rationality in pricing in the Indian mobile sector, which has been operating at prices that have been eroding its viability.

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

Vodafone Idea has estimated liability of Rs 44,150 crore post the apex court order, and made provisioning of Rs 25,680 crore in the second quarter this fiscal.

"The acute financial stress in the telecom sector has been acknowledged by all stakeholders and a high level Committee of Secretaries (CoS) headed by the Cabinet Secretary is looking into providing appropriate relief," Vodafone Idea said.

Vodafone India and Idea Cellular merged their telecom business to handle the tariff war in the sector, triggered by the new entrant Reliance Jio in 2016.

The merged entity Vodafone Idea came into existence on August 31 last year as the biggest telecom operator in the country with 408 million mobile customers.

However, the financial woes for the company did not end and the company lost over 100 million mobile subscribers since merger due to the cut throat tariff war.

According to the Telecom Regulatory Authority of India, prices of mobile data have fallen drastically by about 95 per cent to Rs 11.78 per gigabyte (GB).

Mobile calling rates dipped by about 60 per cent to about 19 paise per minute between June 2016 - December 2017.

Reliance Jio is offering unlimited voice calls in all it mobile services phone plan.

Promoter firm Vodafone, which holds majority stake of 45.39 per cent in Vodafone Idea, has said that the group will not infuse any further equity investment in the Indian telecom venture and reportedly similar stand has been taken by the Aditya Birla Group. This leaves the company with no other option but to support operation from internal resources.

Vodafone Idea said it has the largest spectrum footprint and by accelerating its network integration, the company is rapidly expanding both its coverage and capacity and is well on track to offer 4G services to 1 billion Indian citizens by March 2020.

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