Bharti Airtel Ltd, world’s top mobile phone carrier has announced that it is going to raise voice call prices. India’s top carrier in mobile communication said that it is raising prices of all call tariffs to account for rising costs, sending shares of telecommunication companies higher as investors bet that rivals will follow the market leader.
Idea Cellular Ltd, India’s No.3 carrier by revenue and No.4 by customers has also said that from Wednesday it had effectively raised voice call prices in some parts of the country after withdrawing promotional offers. Idea did not reveal the details of those locations.
The raise in the price of call tariffs was initiated by the phone carriers in India since they have to face billions of dollars in airwave surcharges after the government overhauled its system of spectrum sales in response to a massive scandal in 2011 over an alleged below-market price sale of permits and airwaves three years before.
The government will be selling the airwaves through open bidding in an auction. Next bidding would take place in March with the minimum bid price at both auctions more than six times the previous fees set by the government. A sector analyst of Nirmal Bang Equities, Harit Shah said that part of the tariff hike is driven by cost pressures and also it is sort of a pre-emptive move in order to improve financials because they are going to have a major auction ahead. Shah said that raise of call tariffs would be moderate and add extra pressure on call volumes. He added that India is a price-sensitive market and hence there may not be any impact on usage.
Of course, the carrier might not stick with new prices. It has reported a loss of market share with an increase in call tariff in 2011. Bharti Airtel said that it did not increase headline tariffs but reduced promotional benefits and free minutes offered to customers. It added that price change was in line with the increase in its costs. As per reports from genuine sources, Bharti Airtel is reducing free minutes by up to a quarter and has increased prices of some call vouchers for prepaid customers by Rs. 5 – 15 ( 10 to 30 cents).