Indian telecom industry has been in massive trouble since the last few months, with the latest trouble coming from the Supreme Court’s judgment on AGR for the private sector telecom operators. Two of India’s biggest private-sector operators – Airtel and Vodafone Idea, are now facing massive financial issues and in a bid to survive, both of them are taking some drastic steps that might affect their customers highly.
A flurry of media reports yesterday said that Vodafone is increasing prices of its tariffs to offset the financial burden and soon faster that, Bharti Airtel followed suit and it also announced an increase in prices for its services soon.
What has happened?
The Supreme Court recently delivered its verdict on the AGR and that has resulted in telecom operators being asked to pay all the dues to the Indian government within a period of three months. According to media reports, the operators are required to pay up to Rs 92,000 crores to the Department of Telecom (DoT).
What have telecom operators done?
After the verdict on the AGR, telecom operators are now required to pay Rs 92,000 crores to the government of India as the dues within three months and that has put financial stress on the operators. Hence, to offset some of the burden, Vodafone Idea and Airtel have announced that they will increase prices of their services to keep up with the rising costs. And that means higher telephone bills for the customer.
“The acute financial stress in the telecom sector has been acknowledged by all stakeholders and a high-level Committee of Secretaries (CoS) headed by the Cabinet Secretary is looking into providing appropriate relief. To ensure that its customers continue to enjoy world-class digital experiences, Vodafone Idea will suitably increase the prices of its tariffs effective 1 December 2019,” the company said in a press statement.
“Airtel will increase price offerings in the month beginning December. While continuing to provide affordable tariffs to customers, it would balance the needs of the company to remain viable and thereby continue to invest in the much needed digital infrastructure and maintain the quality standards required by our customers,” an Airtel spokesperson said.
What’s in for customers?
Customers will have to pay more for the existing services. It is said that Vodafone Idea customers could see an increase of almost 10 per cent in telephone bills from December 1. Airtel hasn’t given out a date for the price hike yet but analysts suggest that due to Airtel higher Average Revenue Per User (ARPU), Airtel might make it slightly easier for its customers’ pockets. Hence, on an average, expect prices of all-rounder packs, data packs, Talktime vouchers and others to increase at substantially.
What about Reliance Jio?
Jio hasn’t said anything on this front but the company is already charging its customers for high Interconnect Usage Charges (IUC) for all outgoing calls made to other networks. Jio users have to pay 6 paise per minute for these outgoing calls although all calls to Jio numbers and landline connections are still free. Customers have to get extra IUC packs for making calls and there’s no option to avoid it. Every Jio customer has to pay at least Rs 10 extra per month in order to make calls.
Will prices only rise after this?
Media reports say that the government is looking for ways to ease the financial stress after Vodafone declared that it was tough to survive in the Indian market after the new AGR ruling. However, no decision has been taken so far and these operators will have to pay all the dues and charges within a three month period.