Are we about to see the end of a great run of affordable tariffs for Airtel mobile users? If we are to believe the hints over the past week or so, Bharti Airtel could look at hiking tariffs in the coming weeks and months. At a book launch this week, Bharti Airtel founder and chairman has said as much. Subscribers should ‘prepare to pay a lot more’ or get significantly less data, for instance, for the monthly bills they pay and the prepaid recharge they do, at this time. Earlier, Mittal had also shared fears that the telecom Industry in India may be reduced to two players if the third player doesn’t infuse fresh capital, without naming Vodafone Idea. At this time, Bharti Airtel and Vodafone Idea are embroiled in a legal battle with the government over the adjusted gross revenue (AGR) issue.
India has one of the most affordable tariffs for mobile users, anywhere in the world. If we are to look at the impact of a potential, we have to perhaps understand what Mittal said about data tariffs. “You either consume 1.6GB of capacity per month either at this price point (₹160) or you may prepare to pay a lot more. We are not wanting $50-60 like the US or Europe but certainly $2 for 16 GB per month is not sustainable,” he said. His reference is to the calculation that for Rs 160, Airtel users get as much as 16GB of 3G or 4G data. That works out to Rs 10 per GB of data. He calls this sort of tariff structure a tragedy. The company believes that is unsustainable and either users should restrict usage to 1.6GB data for the same Rs 160 or pay a lot more. By that calculation, it would work out to Rs 100 per GB of 4G data.
There is no doubt that data prices for mobile users in India are the lowest in the world. According to the UK based Cable.co.uk, mobile users in India pay between $0.02 to $2.75 for 1GB of data, depending on the tariff plan they choose. Mobile users in China pay between $0.61 and $1.76 for every GB of data. Users in the US pay between $12.55 and $99.68 per month for a GB of data.
If we are to take the same translation to the current prepaid and postpaid tariffs and what they may look like in the future, let is take the entry level Rs 45 plan for prepaid users. This offers 28 days validity with unlimited local and national calls. Ideal then, at present, for someone who either has a basic phone or relies solely on Wi-Fi connectivity to stay connected. Would they see a price hike closer to Rs 100 per month for their prepaid recharge, in order to drive up the average revenue per user (ARPU) figures?
Then comes the data question. If we take the Rs 199 prepaid recharge plan, this has 24 days of validity, unlimited local and national calls as well as 1GB data per day. A tenfold reduction in data benefits means that the same plan may offer around 2.5GB data for an entire month.
At this time, Airtel’s postpaid plans start at Rs 499 per month and bundle 75GB of data along with unlimited local and national calls. There are four postpaid plans in total, the others being the Rs 749 plan, the Rs 999 plan and the Rs 1599 plan. The Rs 749 and Rs 999 plans can be shared with family members as well, which further adds value and keeps the monthly billing spends in check.
At this time, telecom companies in India including Airtel and Vodafone Idea have to look for stronger sources of revenue, not just to factor in the operating costs and overheads, but also have to factor in the massive AGR payments that will need to be made in the coming months. Then there is also the matter of the 5G spectrum auctions, expected to happen sometime in the next few months, which will require a significant outlay as well.