NEW DELHI: Bharti Airtel has increased call tariffs by 20-50% in some regions of the country - a move that may change market dynamics, as it marks the first hike by an incumbent operator in three years.
Industry executives say Bharti will extend the price hike to other parts of the country soon and also added that its primary competitors in the GSM space - Vodafone Essar and Idea Cellular - are expected to follow suit. The six regions where Bharti has increased local and long distance call rates include Delhi, Andhra Pradesh, Kerala, Rajasthan, Madhya Pradesh and Gujarat.
The savage price war, that has plagued the sector for the past two years, has resulted in Indian consumers enjoying rock bottom tariffs - the lowest in the world. The tariff cuts also destroyed the profitability of most mobile phone companies in the 14-player market. It resulted in the industry's revenues being stagnant for the last two years despite the sector adding over 400 million new customers during this period.
Bharti is also the second major operator to increase call rates over the last couple of weeks.
Tata TeleServices, which had unleashed the price war with its per-second billing-based GSM offering about two years ago, recently doubled STD call charges for new subscribers after a year of connection and raised local and national SMS charges by 67% and 25% respectively.
"Most operators have done whatever they could to optimise costs; they have reached the bottom of the pit. I am pretty confident that (after Bharti) others will raise call tariffs too but it will be difficult to predict by how much," said Ernst & Young's vice-president for telecom transaction advisory practice Akshay Grover .
Recently, in the Mumbai region, most operators, including Bharti Airtel, Vodafone Essar and Idea Cellular, increased long-distance or STD calls tariffs.
A Bharti Airtel spokesperson confirmed the rise in tariffs on Friday and said the company was left with limited options but to raise tariffs while also blaming increasing inflation....EET
Industry executives say Bharti will extend the price hike to other parts of the country soon and also added that its primary competitors in the GSM space - Vodafone Essar and Idea Cellular - are expected to follow suit. The six regions where Bharti has increased local and long distance call rates include Delhi, Andhra Pradesh, Kerala, Rajasthan, Madhya Pradesh and Gujarat.
The savage price war, that has plagued the sector for the past two years, has resulted in Indian consumers enjoying rock bottom tariffs - the lowest in the world. The tariff cuts also destroyed the profitability of most mobile phone companies in the 14-player market. It resulted in the industry's revenues being stagnant for the last two years despite the sector adding over 400 million new customers during this period.
Bharti is also the second major operator to increase call rates over the last couple of weeks.
Tata TeleServices, which had unleashed the price war with its per-second billing-based GSM offering about two years ago, recently doubled STD call charges for new subscribers after a year of connection and raised local and national SMS charges by 67% and 25% respectively.
"Most operators have done whatever they could to optimise costs; they have reached the bottom of the pit. I am pretty confident that (after Bharti) others will raise call tariffs too but it will be difficult to predict by how much," said Ernst & Young's vice-president for telecom transaction advisory practice Akshay Grover .
Recently, in the Mumbai region, most operators, including Bharti Airtel, Vodafone Essar and Idea Cellular, increased long-distance or STD calls tariffs.
A Bharti Airtel spokesperson confirmed the rise in tariffs on Friday and said the company was left with limited options but to raise tariffs while also blaming increasing inflation....EET
