The Telegraph
Thursday , May 1 , 2014
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Airtel tariff hike hint

Cost pinch

New Delhi, April 30: Bharti Airtel today said it would continue to cut back on discounts and freebies on call rates and consider raising tariffs.

“Our strategy is to cut discounted minutes as we continue to focus on raising net realisation. We will not touch headline tariff (for now) but at some point there may be an opportunity to raise tariffs,” managing director Gopal Vittal said here today.

Rising input costs are making the current levels of voice pricing “absolutely unsustainable”, Vittal said. “With rising cost of diesel, network, spectrum, fibre, the cost of actually rolling out networks… I think there is no question but to reduce discounted minutes,” he added.

Bharti’s voice realisation per minute has improved to 37.07 paise from 35 paise four quarters ago, but analysts feel it needs to go up further to beat the rising cost graph.

Airtel has recently increased mobile service rates of both Internet and voice calls under certain schemes. It has been consistently cutting down on freebies for the last few quarters to increase voice realisation and improve profitability.

“It has been happening over the last four quarters. If I look at secular basis over the next couple of years, there is no other option but for voice realisation to go up,” Vittal said.

The Bharti chief said intense competition and rising costs would lead to a shakeout in the telecom sector and predicted that just 5-6 operators would be left in the market.

Analysts maintain this process of consolidation will gain pace with smaller players such as Aircel and Loop being marginalised by larger companies in terms of revenue share.