In a surprise announcement on Monday, Dhirubhai Ambani Group Company Airtel announced tariff hike by Indian benchmarked tariffs and the company’s new tariffs. The announcement was made after an “informal” meeting with top telecom operators in India.
Airtel has been more stringent on its tariff hikes, since the beginning of 2019, compared to other telecom companies like Bharti Airtel and Vodafone India that were around 10 percent only.
Airtel claimed that the tariff increases were due to “cost of operations, spectrum charges, and regulatory levies” and it was not on account of tax hikes.
Mobile tariffs were last hiked in February 2019 by about 10 percent following the implementation of Goods and Services Tax (GST) on telecom services.
For example, the basic plan for postpaid customers was hiked from Rs 75 to Rs 80 per month. (WCDMA) pack from Rs 125 to Rs 135.
The new increase became effective from July 1, 2019. According to Airtel, the new tariff hikes have been made on a quarterly basis, and the increases are “in line with the inflation and cost of operations”.
Airtel’s tariff hike schedule is as follows:
Tariff Reversal Plan (Taluk): Re 1 per day (1.5p / hour) Basis pack: Rs 323/month (WCDMA): Re 1 per day (1.5p / hour)
This is the first time since March 2014 when Airtel has raised tariffs by more than 10 percent. Last year in December, 2018, Bharti Airtel had announced a hike of 12 percent. However, Vodafone and Idea Cellular increased the tariffs in July 2019 by around 10-11 percent.
Airtel’s tariff hike schedule is as follows:
Airtel said this was its “largest revision of the tariff plan”.
There are rumours that Airtel may be hiking telephone tariffs again. With the middle-class struggling with inflation rates, it is indeed a worrying development. We take a look at some of the possible reasons for this move and how it impacts different sections of society.
The rise
The new rates would be Rs.100/- higher than what they are today, i.e Rs.55 / min and Rs.50 / SMS on airtime sales in both urban and rural areas (the current plan is Rs 10/min and Rs 9 / SMS). To put it in perspective, the proposed net tariffs of Airtel (PROMOTIONAL VALUE) are:
- Rs.10/min
- Rs.50/SMS
- Rs. 55/min
- July 17, 2018 | Rs. 8/min (average)
- (0.7%) – a 20% increase in charges for the same plan & service!
Impact on people at the bottom of the income ladder
The tariff hike would put ringtones, games, data and voice calls out of reach for the budget-conscious customers who require these services to run their businesses or support their families.
Impact on middle-class users
A small increase of 20% in the tariff for calls, SMS and mobile internet would eat into our entertainment budget. And even a 5% increase in tariffs every year is a steep climb down from the current levels.
While responding to an analyst’s question during the company’s earnings call, Bharti Airtel MD and CEO for India and South Asia Gopal Vittal said, “I do expect a tariff hike sometime in 2022.
I don’t think it’s going to happen in the next 3-4 months because the SIM consolidation and growth needs to come back but I do expect another round of tariff increase.
Of course, it got to be determined by the competitors’ dynamics. We would not hesitate to lead just as we have done in the recent past,”
Edited by: Mahi Gupta
Published by: Vishakha Verma
