Bharti Airtel will also increase prices of tariff plans starting December 1, 2019. The announcement from Airtel came right after that from Vodafone Idea. Both the telcos did not dive into further details on how much the tariffs will be hiked, but analysts are expecting at least 35-40% hike. Both Bharti Airtel and Vodafone Idea posted record losses in Q2 FY20, and the decision to increase tariff prices comes at the right time. A couple of years ago, both the telcos decreased tariffs to match Reliance Jio, but it's impossible to sustain in the market right now with those tariffs, so the telcos decided to hike the prices.
Vodafone Idea and Bharti Airtel Prepaid Plans Start at Less Than Rs 25
Right now, the basic service validity prepaid plans from Vodafone Idea and Bharti Airtel starts at less than Rs 25. Bharti Airtel has a Rs 23 Smart Recharge plan that does not offer any talk time or data benefit, but it extends a customer's service validity by 28 days. Vodafone Idea has a Rs 24 All-Rounder plan with the same service validity extension benefit.
"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," said Bharti Airtel in a press note of why it's increasing the tariffs.
For the unaware, Bharti Airtel posted a massive quarterly loss of Rs 28,450 crore last week and it's the highest in any quarter for the telco since its existence. Vodafone Idea posted an even worse consolidated net losses of Rs 50,921 crore for Q2 FY20. The losses increased because of the added AGR dues and the telcos are left with no option rather than increasing tariffs.
It's also said that the government will likely approach Trai to come up with floor pricing in the telecom sector so that telcos can have some fresh life in the coming days. While Trai always denied any such approach from the government, Bharti Airtel cited that the sector regulator may come up with a consultation paper on floor pricing.
Bharti Airtel said, "We understand that Trai is likely to initiate a consultation for bringing rationality in pricing in the Indian mobile sector which has been operating at prices that have been eroding the viability of the sector."
Bharti Airtel May Lose Subscribers After Tariff Prices Hike
Both Bharti Airtel and Vodafone Idea may start losing subscribers yet again once the increased tariff plans come into effect. Bharti Airtel' subscriber base has been steady for a few months now sitting around 280-290 million, but it may start dipping again as subscribers will likely move to Reliance Jio or BSNL who are yet to announce tariff prices hike.
Vodafone Idea confirmed that it still has over 300 million subscribers and it will be a challenge for the telco to retain that number after the new prices come into effect. If Reliance Jio continues with these tariffs, then the telco will reach its target of 500 million subscribers in no time as the majority of Airtel and Vodafone Idea customers will migrate to the Mukesh Ambani owned telco.
It will be interesting to see BSNL's take on this move as the telco is all set to start its second innings after the revival package from the government. BSNL should not hike prices so that it will gain some good amount of subscribers under its belt.