Vodafone, Airtel Users Brace For Tariff Hike From December

Daniel Fowler
November 20, 2019

Reeling under the impact of the Supreme Court's ruling on adjusted gross revenue (AGR), Vodafone Idea and Bharti Airtel on Monday announced that they will be increasing tariffs from December, although both telcos did not specify the quantum.

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

Vodafone Idea shares on the BSE gained 21.47% at ₹4.47 on Monday, as investors anticipate government relief for the sector. The company said it will hike tariffs in such a manner that it will not adversely affect data consumption or overall growth.

Bharti said the telecom sector was highly capital intensive with fast-changing technology cycles that require continuing investments.

The global brokerage house maintained its hold rating for Vodafone Idea and slashed target price to Rs 2.40 from Rs 8 as company would still lose a majority of high ARPU subscribers to Bharti Airtel.

Beleaguered Indian operators Vodafone Idea and Bharti Airtel have indicated they will need to start charging their customers more.

There had been a string of negative news leading up to the telecom tariff hike announcement.

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For the quarter ended September 30, 2019, Vodafone Idea and Bharti Airtel reported a cumulative loss of nearly Rs 74,000 crore between them. This includes MTS India, Aircel, Telenor, Tata Docomo, Reliance Communications, etc. Vodafone and Idea chose to merge to become, at least then, the biggest operator in the country. During the second quarter of this fiscal, Bharti Airtel reported a loss of Rs 23,045 crore, whereas Vodafone Idea saw losses balloon to Rs 53,921 crore due to provisioning for AGR payout to Department of Telecommunications (DoT). It is, therefore, extremely important that the industry remains viable to support the vision of Digital India, it added. That drove some to bankruptcy and led to the merger of others such as Vodafone with Idea.

In a much-expected turn of events, Mukesh Ambani's Reliance Jio has toed the line that was breached by his arch rivals -Vodafone Idea and Bharti Airtel.

Vodafone had also noted that 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.

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

Reliance Jio is offering unlimited voice calls in all it mobile services phone plan. Till now, both the companies have been competing aggressively with Reliance Jio, which is well on its way to achieve 500 million subscribers.

Bharti Airtel share price has been gaining for the last three days and risen 17.84% during the period.

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