Vodafone Idea and Bharti Airtel have revealed plans to increase mobile service rates from December 1. In separate statements, Vodafone Idea cited "acute financial crisis" as reason behind the increase in tariffs, whereas Airtel said the move is meant to keep the industry and the company "viable".
"To ensure that its customers continue to enjoy world class digital experiences, Vodafone Idea will suitably increase the prices of its tariffs effective December 1, 2019," Vodafone Idea said in its statement on Monday afternoon.
The largest telecom operator in the country also said, "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."
Later in the day, Bharti Airtel announced its plans to hike tariffs to bear the costs associated with the telecom business. "The telecom sector is highly capital intensive with fast changing technology cycles that require continuing investments. It is, therefore, extremely important that the industry remains viable to support the vision of Digital India. Accordingly, Airtel will appropriately increase price offerings in the month beginning December," the Sunil Mittal-led telco said.
Things have been tough for the telecom sector for quite some time now. From a dozen in March 2016, the number of players in the industry has dwindled to mere five - Reliance Jio, Vodafone Idea, Bharti Airtel, BSNL and MTNL. Out of these, the last four have substantial losses to their names.
In the quarter ended September 30, 2019, Vodafone Idea and Bharti Airtel reported a cumulative loss of almost Rs 74,000 crore between them. During the second quarter of this fiscal, Bharti Airtel reported a loss of Rs 23,045 crore, whereas Vodafone Idea saw losses balloon to Rs 53,921 crore due to provisioning for AGR payout to Department of Telecommunications (DoT). Last month, the Supreme Court had upheld DoT's definition of adjusted gross revenue, or AGR, and ordered all telecom companies to pay dues as demanded by the department.
Vodafone Idea has said that its ability to continue operations in India will now depend on reliefs from the government and the outcome of the legal recourse in the matter.