Monday, 30th October 2017

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Telecom duo to hike rates

Airtel said it has taken this decision to make its business viable

  • Published 19.11.19, 1:22 AM
  • Updated 19.11.19, 1:22 AM
  • 2 mins read
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Last week, Bharti Airtel had announced a record loss of Rs 23,045 crore for the second quarter ended September 30. (Shutterstock)

Bharti Airtel and Vodafone Idea, the two telecom operators that have been hit by a Supreme Court order on adjusted gross revenue (AGR), on Monday announced that they will raise tariff from December.

Bharti Airtel said it has taken this decision to make its business viable. The announcement came soon after Vodafone Idea said it would raise mobile services rates from December 1.

Neither firm disclosed the extent of the tariff hikes they planned to introduce from December 1.

The telecom sector is highly capital intensive with fast changing technology cycles that require continuing investments and, therefore, it is extremely important that the industry remains viable to support the vision of Digital India, Bharti Airtel said.

“Accordingly, Airtel will appropriately increase price offerings in the month beginning December,” it said.

The decision by the telcos to raise tariffs comes at a time there is a buzz that the government could keep a floor price on voice and data charges.

Last week, Bharti Airtel had announced a record loss of Rs 23,045 crore for the second quarter ended September 30.

The firm added that it understands that telecom regulator Trai is likely to initiate a consultation for bringing in a rationality in pricing in the Indian mobile sector, which has been operating at prices that have been eroding its viability.

“To ensure that its customers continue to enjoy a world-class digital experiences, Vodafone Idea will suitably increase the prices of its tariffs effective December 1, 2019,” Vodafone Idea had earlier said in a statement.

The company had posted the highest ever loss by any Indian company in the September quarter at Rs 50,921 crore.

Last month, the Supreme Court had ruled in favour of the government and directed telecom companies, including Bharti Airtel and Vodafone Idea, to pay dues as demanded by the department of telecom.

Vodafone Idea said its ability to continue in business will depend on reliefs granted by the government and a positive outcome of the legal option it can take.

While the announcement came after market hours, both the Bharti Airtel and Vodafone Idea stocks ended with gains on the bourses.

The Bharti Airtel scrip rose 4.06 per cent, or Rs 15.95, to settle at Rs 409.15 and the Vodafone Idea share surged 21.47 per cent to Rs 4.47.

The gain in the Bharti Airtel share came as the firm withdrew its bid to purchase assets of Reliance Communications. The company had termed the decision of the committee of creditors (CoC) to extend the deadline for the submission of offers at the request of Reliance Jio as “extremely unfair” and “biased”.

During intra-day trades, the scrip rose close to 7 per cent to hit a day’s high of Rs 420.40.

Market circles said Vodafone Idea shares rose on expectations of some relief from the Centre on AGR dues.

Industry association COAI has asked the government to not press for the AGR liability payment and grant waivers. It has also a moratorium of two years for the payment of spectrum dues beyond April 1, 2020.