Info-tech

Vodafone Idea hikes pre-paid tariffs by about 20 per cent

Rajesh Kurup Mumbai | Updated on December 01, 2019 Published on December 01, 2019

The new tariffs will come into effect from December 3

In an attempt to mitigate losses arising from the Adjusted Gross Revenue (AGR) payout, Vodafone-Idea has hiked mobile tariffs by about 20 per cent across its pre-paid services. 

The new tariffs will come into effect from December 3, the company said in a statement.

Earlier on November 18, Vodafone-Idea had stated “acute financial stress” in the sector that required it to hike tariff from December.

The new rates what will be charged by Vodafone Idea

 

The company had posted losses of Rs 50,921 crore in second quarter ended September 30, the highest-ever for a corporate in India.

Read: Airtel, Vodafone Idea to hike tariffs to hike tariffs from December 1

The two other private operators - Bharti Airtel and Reliance Jio Infocomm (RJio) – had also announced plans to hike tariffs, but did not specify the quantum of increase.

 

On its part, Airtel is planning to raise about $3 billion (Rs 21,000 crore) through various modes, mainly to pay Adjusted Gross Revenue (AGR) charges and has convened a board meeting on Wednesday.

 

ALSO READ: Bharti Airtel seeks to raise $3 billion to fund AGR dues

 

The companies have also filed separate review petitions before the Supreme Court against AGR ruling, which would be heard by a three-bench judge.

 

DEATH OF LOW TARIFFS

 

An increase in Average Revenue Per User (ARPU) of about 25 per cent was necessary to tide over the crisis, and operators were expected to hike tariffs in this range, industry experts and analysts had said.

 

“With all three telecom companies now making public statements on their intention to increase tariffs, we believe lower ARPUs are behind us. We build in a 25 per cent hike in tariffs over the next two years and this drives profit after tax increase of 12 per cent for FY21-22, respectively,” brokerage firm J P Morgan said in its November 20 report.

 

“While the initial tariff hike may not be large, eventually over the next two years we see large tariff increases from current levels, given the stress with incumbents,” it said, adding higher tariffs would result in lower subscriber additions.

Published on December 01, 2019
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