Vodafone India CEO Marten Pieters indicates mobile tariff hike

Vodafone India CEO Marten Pieters has indicated mobile tariff hike and more stability for the Indian telecom industry in coming years.

Pieters, according to a PTI report, said the Indian telecom industry is likely to hike phone call and other mobile services rates.

His statement indicates that low tariff regime may not be sustainable any longer for the Indian telecom industry.

Telecom operators’ main concerns are about decline in profitability – primarily due to low call rates and competition. Airtel, which competes with Vodafone, reported 29 percent dip in Q2 fiscal 2014 profit to Rs 512 crore. Bharti Airtel second quarter revenue in fiscal 2014 increased 9.9 percent to Rs 21,324 crore.

You may read Airtel second quarter revenue up 10% to Rs 21,324 crore, profit dips 29%

Idea Cellular is also facing pressure due to decline in profit. The second quarter profit of Idea Cellular declined 3.24 percent to Rs 448 crore from Rs 463 crore in the first quarter of current fiscal. Idea Cellular’s Q2 revenue decreased 3.29 percent to Rs 6,323 crore from Rs 6,538 crore in Q1.

“We have lower tariffs for 18 years against inflation of 8-9 percent per year. Now, can you do that forever? No you can’t,” said Vodafone India CEO Marten Pieters. “So the point has come where lowest has been seen, we will have to increase our tariffs every year depending on cost levels.”

Vodafone India CEO Marten Pieters

Last month Vodafone increased 2G mobile internet rates along with two other players, Airtel and Idea Cellular, in the range of 25-30 percent.

Peiters said that going forward 2G data rates and 3G data rates will be at same level indicating a further hike in 2G mobile internet rates.

Vodafone started 6-7 times high tariff rate when it opened up 3G network. It is now back to 1.5 to 1.6 times of 2G data rates.

The company’s competitors such as Reliance Communications and Aircel have, meanwhile, reduced 3G mobile internet rates to bring them on par with 2G mobile internet rates.

“India has still the lowest tariffs in the world. I think there is only one country which is coming closer, which is China. The only difference being that in China, there are only three operators, they are very profitable and they invested last year $55 billion in telecom infrastructure. We did $5 billion, so what’s better for the country,” he added.

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