Are operators gearing up to raise mobile tariffs?

At a time when most mobile operators are slashing tariffs or offering special discounted voice and data plans to arrest falling ARPUs and MNP churn rate, Airtel has decided to increase its mobile tariffs.

In an official statement released by the operator, Airtel announced an increase of 10 paise for its prepaid Airtel to Airtel calls and a 15 paise hike in Airtel mobile to landline rates.

In effect, tariff for Airtel to Airtel mobile calls has increased to 60 paise per minute from the present 50 paise, and Airtel to landline rates will see an increase to 90 paise from the present 75 paise. SMS rates also remain unchanged at Rs 1 for local SMS and Rs 1.50 for STD SMS.


While the telecom industry stated earlier that with ever-increasing competition in a highly congested market of 13 operators, there will be increase in tariffs in the near future, Airtel which has more than 167 million subscribers as on May 31, 2011, has led the way.

Though increase in tariffs is an important step to improve the financials of telecom operators, other operators refused to divulge any plans to follow suit.

Looking at recent updates, Indian operators appear to be giving special combo offers for 3G data plans, slashing tariffs or offering discounted VAS offerings to woo customers as around 9.35 million subscribers have opted for MNP recently.

Tata DOCOMO recently announced 90-day free voice and data plans for its prepaid and postpaid customers who buy the new HTC ChaCha handset, which it jointly launched a few days ago with HTC.


Idea Cellular had offered a flat 25 percent discount on all international roaming services including calls, SMS and GPRS till July 14, 2011. Idea is also the MNP leader in India at present.

BSNL also launched VoIP video calls at special rates for its national international customers. The VVOIP service comes at a cost of 40 paise per minute for audio calls and Rs 2 per minute for video calls within the country.

BSNL also introduced a new prepaid plan called ‘Venela-Match’ in Andhra Pradesh. This new plan comes with two packs priced at Rs 28 for 2G and Rs 24 for 3G.

This is not the first time that Airtel has spoken about a rise in tariffs. After the 3G auctions, Sunil Mittal, chairman of Bharti Airtel said that 3G tariffs would be high, especially in the metros, in order to ease the burden of the hefty fee doled out for 3G spectrum by the operator. 

Airtel, which saw total revenues of Rs 59,467 crore in FY 2011, witnessed a steep decline in ARPUs from Rs 220 last fiscal to Rs 194 in FY 2011, while minutes per user also declined to 449 from 468 last year. It witnessed a 32.6 percent drop in net profits in 2010-11, as well. While Airtel is second only to Idea Cellular in active VLR subscriber numbers, Airtel is third in the MNP race, after Idea Cellular and Vodafone, as per TRAI data.


The decision to increase tariffs is yet another step in the operator’s bid to increase its profit margins, since it is feeling the heat of its falling profits in India and Africa. 


By Beryl M

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