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Bharti Airtel wants price hike

by Raju Vernekar
0 comment 3 minutes read

By IT Correspondent
New Delhi, August 27:
Telecom major Bharti Airtel’s chairperson Sunil Mittal, recently indicated that the telecom company would make an upward revision in the prices of mobile services in the next six months, citing that low data rates are not sustainable for the telecom industry, the media has reported.

According to Mittal, “16 GB data consumption a month for Rs 160 is a tragedy”. He further noted that consumers should get 1.6GB data at this price or should be ready to shell out a lot more. “You either consume 1.6 GB of capacity per month either at this price point or you may prepare to pay a lot more. We are not wanting USD 50-60 like the US or Europe but certainly USD 2 for 16 GB a month is not sustainable,” Mittal said.

The telecom giant reported an increase in the average revenue per user (ARPU) to Rs 157 in the first quarter ending June 30, 2020. The rise in ARPU came after the tariff hike by the company in December 2019. Mittal was quoted as saying that at the lower end, Airtel users would have to pay a minimum of Rs 100 per month.

“We need a Rs 300 Average Revenue Per User (ARPU)  in which the user will have lower end at Rs.100 a month with decent amount of data,  Mittal said. Airtel’s current ARPU stands at Rs.157, which means the target is for ARPU to nearly double from current levels. For the amount of data Indians are consuming, an increase in tariffs makes logical sense.But what primarily stands between Airtel and its hopes of higher tariffs is Jio’s strategy to grow the number of data users in the country, and enhance data consumption among existing users. To accomplish these goals, Jio prefers tariffs to remain low.

Bharti Airtel has been steadily rolling out new recharge plans and vouchers for its prepaid consumer base in the country. Last week, Bharti Airtel had announced two new prepaid recharge plans for its subscribers in India. The plans are priced at Rs 599 and Rs 448 and available to buy on Airtel’s official website. Both the plans bring calling benefits, daily internet quota and free Disney+ Hotstar VIP subscription.

But the main hurdle for Bharti Airtel to cross is getting industry leader “Reliance Jio Infocomm Ltd” to agree on a tariff hike. For the past four years, since its launch, “Jio” has by and large determined the broad tariff structure for the entire industry. Last December’s tariff hikes of roughly 25% were possible only after “Jio” agreed to play ball. The moot question, therefore, is if it agrees to another hike. It is also important to note that “Jio” has a new partnership with technology giant “Google Inc”. to launch an affordable smartphone.

While it can be argued that the affordable smart phone segment may use a differentiated tariff strategy, there is always a risk of customers down trading. The best hope for Bharti Airtel, then, is to somehow squeeze in a tariff hike before the launch of Jio’s affordable phone.

Much also depends on the final outcome of the Supreme Court ruling in the AGR (adjusted gross revenue) dues case. If, as a result of an unwieldy penalty, “Vodafone Idea Ltd” ends up in bankruptcy, both “Airtel” and “Jio” will get a large share of its customers. As such, they will get a boost in revenues and the need for an immediate tariff hike will not be as much.

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