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Thursday , January 24 , 2013
Since 1st March, 1999
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Tariff hike itch in cell freebie cuts

New Delhi, Jan. 23: Prepaid mobile users availing themselves of numerous promotional offers will have to shell out more for the benefits or else make fewer calls.

Bharti Airtel, the country’s top mobile operator, today slashed free talk-time and SMS offered through promotional and special value vouchers to prepaid customers.

Analysts see this as a precursor to a hike in call charges by service providers, who have been battling falling profitability in recent months. Bharti’s net profit in July-September dropped 29.7 per cent to Rs 721.2 crore from Rs 1,027 crore in the year-ago period.

Post-paid customers will not be affected by today’s announcements, but prepaid subscribers, who comprise about 95 per cent of the mobile users in India, may feel the pinch.

The price increase will vary from customer to customer and from circle to circle, depending on the tariff plan. In most of the costlier plans, ranging from Rs 350-Rs 1,000, there has been no change.

The axe is mainly on discounts and freebies given on inaugural and low-value vouchers, which attract a large number of poor and lower middle-class users as well as students.

Earlier, full talk-time was being offered in recharge vouchers for as low as Rs 30. These vouchers will now cost Rs 50-60. Similarly, the price of vouchers which extended the validity of prepaid numbers has been raised. For instance, with a voucher of Rs 45, one can now increase the validity by 15 days compared with 30 days earlier.

Free talk-time minutes given in Special Value Vouchers have been reduced — if a voucher for Rs 71 came with 135 minutes, it has been reduced to 125 minutes.

Airtel said there had been no across-the-board increase on voice or data tariffs for prepaid or post-paid customers. “There is no change in the headline tariff. In most circles, we have reduced promotional benefits and free minutes on both acquisition and existing use,” said an Airtel spokesperson.

Analysts said other operators could follow suit by reducing promotional rates and low-value voucher rates over the next couple of weeks.

While Idea Cellular has withdrawn promotional offers in some circles, Vodafone said they were “inclined to follow to maintain consistency and competitive position”.

“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 essential for their profitability. Understandably, call prices will go up in a phased manner if the industry has to keep sustainable service delivery,” said Sivarama Krishnan, executive director of PwC India.

According to analysts, revenue earned per customer varies from 60 paise per minute to 90 paise per minute in different circles.

However, because of discounts on some inaugural and low-priced vouchers, the actual earning per customer is much lower and varies from 27 paise per minute for new operators to 43 paise per minute for established operators.

The difference between old and new operators’ earnings occur partly because the new players offer deeper discounts to woo customers and partly because they have to account for overhead costs which were run up many years ago by established players.

However, the stiff competition leaves very little chance for companies such as Airtel, which are battling 10 to 12 rivals in every circle, to raise call rates.