NEW DELHI: Mobile phone bills of consumers will rise 20-30% this year, top executives of all leading operators said, as the country’s debt-ridden telcos raise call tariffs to revive revenue growth and cut losses in the fiercely competitive sector.
The move follows the 20% increase last July, the first hike after operators slashed tariffs in 2008 as they chased new customers, but ended up eroding profits. It comes at a time telcos are staring at penalties and fines running into thousands of crores of rupees for a range of alleged violations.
Vodafone quietly raised tariffs of postpaid users in January by about 20% in Delhi and plans to extend this to other regions, with rivals set to follow suit this month. Telcos say tariffs for prepaid customers, who form 96% of users, will be raised after March.
An executive close to Bharti Airtel said a 20-30% rise in the next 12 months was the “minimum requirement for the industry to keep its head above water”.
Even state-run BSNL, which did not raise rates last time, plans to increase tariffs, a top executive said.
An executive close to Reliance Communications said the industry needed higher charges to service itsRs 275,000-crore debt. “Except the top three, all operators are losing Rs 800-1,000 crore per quarter,” the executive said. Uninor Managing Director Sigve Brekke told ET recently if ‘incumbents increase tariffs, he would be the first to follow’, adding that customers could afford higher tariffs.
India added 400 million users in the last two years, but revenues crawled 10%, and average minutes of usage per customer fell from 465 in 2007 to 350.
“Inflation has been around 9% in the last two years. The industry paid Rs 70,000 crore for 3G spectrum. These services failed to take off and costs will eventually have to be passed on,” said the executive of a leading GSM operator. He said earnings from every minute of traffic had plummeted to 40-45 paise from Rs 1 in 2007.
Samaresh Parida, director, Vodafone, said government levies had raised costs. “If the government keeps on trying to extract more from us, we are left with no alternative.”