NEW DELHI: The government has dispelled the notion that the recent tariff increases by private telecom operators will hurt consumers, saying data and voice calls will be the cheapest in the world and lower than what they were four years ago.
The country’s three private telcos increased prices of prepaid plans by up to 40% or so on Sunday to shore up revenue and increase profitability.
According to top government officials who spoke on condition of anonymity, the average wireless data price is expected to increase to Rs 16.49 per GB by 2019 end after the tariff hike – still the cheapest in the world. Outgoing calls would cost an average 18 paise per minute compared with 13 paise in March, they said. Data prices to remain cheapest in the world despite tariff hike: Govt sources
Information technology minister Ravi Shankar Prasad tweeted on Monday that the Narendra Modi-led NDA government had inherited the high mobile internet cost – as high as Rs 268.97 per GB in 2014 – from the previous UPA regime.
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Citing data from cable.co.uk, Prasad tweeted that India’s mobile internet rate per GB is the lowest in the world. “Now it is Rs 11.78 per GB, as per TRAI.”
“The mobile phone mess was the scam-tainted legacy of UPA. We have set it right, expanded mobile telephony with consumer satisfaction. Also Committed to making BSNL/ MTNL professional and profitable,” Prasad tweeted on Monday.
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The minister’s comments followed All India Congress Committee spokesperson Pawan Khera’s remarks on Sunday that private operators were set to gain Rs 36,000 crore every month from the tariff increases.
Analysts said the tariff increase would be the biggest in India’s telecom industry, with the end of free voice services in most plans. The government nudged Reliance Jio Infocomm, Bharti Airtel and Vodafone Idea to bite the bullet after a prolonged price war since 2016 damaged industry finances and hurt the state’s revenue.
Vodafone Idea and Airtel increased rates only for prepaid subscribers, who account for over 90% of their user base, starting December 3. Price increases by Jio, which caters to 355 million customers, will be effective from December 6.
Khera questioned the India government’s decisions on allowing private telecom operators to raise prices on one hand and on the other giving them a two-year moratorium on spectrum-related payments including interest and penalties.
Analysts at various brokerage firms are of the view that tariff hike by all three telcos — Reliance Jio, Vodafone Idea Limited, and Bharti Airtel — will improve the overall financial health of the telecom sector, and will help these telcos increase their respective average revenue per users (ARPUs).
Axis Capital, in a note, said that Reliance Jio’s tariff hike announcement on Sunday is likely to set the stage for improvement in the financial health of telcos with incumbents also taking price hike without risk of subscriber loss. It added that the price hike will help increase ARPU of all three telcos -Airtel, Vodafone Idea and Reliance Jio — that may get amplified by operating leverage.
“Telecom players have recognized hyper-competition and have put in corrective measures (tariff hike) in place which is the first step towards moving to financial health while they (telcos) continue to work with the government to see the additional areas where health of the sector can be improved,” Rajan S Mathews, director-general of the Cellular Operators Association of India (COAI) told ET.
He added that AGR payments are to be made by January-end, so something significant had to be done by the industry to address the need to get those fund.