Bharti Airtel and Vodafone Idea have declared an increase in tariffs after both the companies announced their struggles with the increasing debts post the Supreme Court’s decision on AGR for these operators.
- Both Airtel and Vodafone Idea will increase their tariffs soon.
- The increase in tariff is due to new AGR ruling delivered by the Supreme Court.
- Vodafone Idea will increase prices from December 1, 2019.
The Indian telecom industry has been in massive trouble since the last few months, with the latest trouble coming from the Supreme Court’s judgment on AGR for the private sector telecom operators. Two of India’s biggest private-sector operators – Airtel and Vodafone Idea, are now facing massive financial issues and in a bid to survive, both of them are taking some drastic steps that might affect their customers highly.
A flurry of media reports yesterday said that Vodafone is increasing prices of its tariffs to offset the financial burden and soon faster that, Bharti Airtel followed suit and it also announced an increase in prices for its services soon. Both the companies gave out official statements and most of them stressed on the fact that they want to maintain the quality of services despite the rising demand and costs.
Hence, as a customer of Airtel or Vodafone Idea, you will face an increase in prices for all telecom services. And if you are interested to know the ‘whys and hows’, read on.
What has happened?
The Supreme Court recently delivered its verdict on the AGR and that has resulted in telecom operators being asked to pay all the dues to the Indian government within a period of three months. According to media reports, the operators are required to pay up to Rs 92,000 crores to the Department of Telecom (DoT).
How it all began?
To explain in brief, the DoT and the private sector telecom operators have been at disagreement over the Adjusted Gross Revenue (AGR). The government said that AGR should include income from both telecom and non-telecom operations, with the latter including all assets, deposits, charges, taxes and more. The operators argued that AGR should only include income from telecom income. The case was taken to the Supreme Court and the final verdict was delivered on October 24, ruling in favour of the DoT.ADVERTISEMENT
What is AGR?
Adjusted Gross Revenue is what telecom operators need to pay to the government as part of revenue sharing model for an operational license. Operators are required to share a percentage of their revenue as their License Fee and Spectrum Usage Charges.
What have telecom operators done?
After the verdict on the AGR, telecom operators are now required to pay Rs 92,000 crores to the government of India as the dues within three months and that has put financial stress on the operators. Hence, to offset some of the burden, Vodafone Idea and Airtel have announced that they will increase prices of their services to keep up with the rising costs. And that means higher telephone bills for the customer.
“The acute financial stress in the telecom sector has been acknowledged by all stakeholders and a high-level Committee of Secretaries (CoS) headed by the Cabinet Secretary is looking into providing appropriate relief. To ensure that its customers continue to enjoy world-class digital experiences, Vodafone Idea will suitably increase the prices of its tariffs effective 1 December 2019,” the company said in a press statement.
“Airtel will increase price offerings in the month beginning December. While continuing to provide affordable tariffs to customers, it would balance the needs of the company to remain viable and thereby continue to invest in the much needed digital infrastructure and maintain the quality standards required by our customers,” an Airtel spokesperson said.
What’s in for customers?
Customers will have to pay more for the existing services. It is said that Vodafone Idea customers could see an increase of almost 10 per cent in telephone bills from December 1. Airtel hasn’t given out a date for the price hike yet but analysts suggest that due to Airtel higher Average Revenue Per User (ARPU), Airtel might make it slightly easier for its customers’ pockets. Hence, on an average, expect prices of all-rounder packs, data packs, Talktime vouchers and others to increase at substantially.
What about Reliance Jio?
Jio hasn’t said anything on this front but the company is already charging its customers for high Interconnect Usage Charges (IUC) for all outgoing calls made to other networks. Jio users have to pay 6 paise per minute for these outgoing calls although all calls to Jio numbers and landline connections are still free. Customers have to get extra IUC packs for making calls and there’s no option to avoid it. Every Jio customer has to pay at least Rs 10 extra per month in order to make calls.
Will prices only rise after this?
Media reports say that the government is looking for ways to ease the financial stress after Vodafone declared that it was tough to survive in the Indian market after the new AGR ruling. However, no decision has been taken so far and these operators will have to pay all the dues and charges within a three month period.