Telecom Lead Asia: Mobile service provider Airtel has increased voice call prices by 100 percent.
Idea Cellular and Vodafone will join the market leader to increase the mobile tariff.
When contacted, Vodafone India spokesperson, said: “We welcome the price rationalization for bonus cards, special tariff vouchers and free minutes from our competitors. We feel these were inevitable given the sharp input and energy price increases in the country. We are studying these moves individually across all our circles. We are inclined to follow to maintain consistency and competitive position though we haven’t decided on our precise circle-wise moves.”
Ovum says global telecom service providers’ (SPs) revenue to grow 2 percent annually between 2012 and 2018. The dismal growth is due to carriers’ struggle with increased over-the-top (OTT) competition, end users’ more interest in buying devices and apps than services, and limited customer appetite for usage-sensitive billing.
Ovum suggests that SPs must continue to focus on cost control to offset relatively flat revenue growth over the next five years. Telecom operators have the potential to gain greater economies through their global vendors in terms of network rollout, network operations, network optimization, customer experience, and service quality management.
Bharti Airtel has doubled the call rates from Re 1 per minute to Rs 2 per minute. Media reports suggests that the company is reducing free minutes by up to a quarter and has increased prices of some call vouchers for prepaid customers by Rs 5-15.
Idea Cellular said on Wednesday that the company has raised call prices in some zones by withdrawing some promotional offers but there was no across-the-board increase. Idea has also gone for a steep hike from 1.2 paise per second to 2 paise per second.
“We have been reiterating that increase in prices is inevitable, which is reflected from the fact that despite rising costs, tariffs have been falling over the past 12 quarters,” said Bharti Airtel in a statement on Wednesday. “This revision in prices is in line with these increasing costs.”
The call price increase will be extended to all of India’s 22 telecommunications zones in phases.
Reuters reported that competition is easing after several smaller operators either folded or cut back operations, following a Supreme Court order to revoke their permits. Bigger operators have long been expected to increase call prices.
Sivarama Krishnan, executive director, PwC India, said: “The announcement of increase in voice call prices by a leading operator today and another one in the recent past is a development which was anticipated by the industry. Operators have to account for the increased costs of spectrum sale last month and another auction coming up in March. Capping free minutes as well as call vouchers is essentially working around the benefits extended to consumers but understandably call prices will also go up in a phased manner if the industry has to keep sustainable service delivery. We expect that other industry players too will be taking the same route in due course.”
According to Ovum, network/IT operations account on average for 18 percent of telco operating costs, of which 60 percent ($126 billion) is for spending internally, mostly using salaried staff.
To meet operators’ needs vendors will have to develop far more complex solutions for carriers than in the past. Carriers need help monetizing their networks and retaining customers, not just deploying the equipment.