Airtel Plans: Bharti Airtel plans to raise mobile call and data rates across all plans this year, according to Chairman Sunil Bharti Mittal. The company recently increased the price of its minimum recharge for the 28-day mobile phone service plan by 57% to ₹155 in eight circles. When asked about the need for a tariff hike, Mittal stated that the return on capital in the telecom business is very low, and a tariff hike is expected this year.
Low return on capital in telecom business
Mittal explained that the company has a strong balance sheet due to the injection of a lot of capital. However, the return on capital in the industry is very low, and a change is needed. He stated that small increments are needed to come into the Indian tariff situation, and he hopes this happens this year. Regarding the impact of the price increase on people at the bottom of the pyramid, Mittal believes the hike is low compared to the spending people are making on other things. He believes a robust telecom company is needed in the country to realize India’s dream of digital economic growth, and the government, regulator, and people are aware of this.
The need for small increments in Indian tariff situation
Airtel’s minimum recharge plan of ₹99, under which it offered 200 MB of data and calls at the rate of ₹2.5 paise per second, has been discontinued. The company’s short-term ARPU target is ₹200, but it focuses on a medium to long-term ARPU target of ₹300 through price hikes for sustainable operations. Mittal stated that India’s focus on the economy and infrastructure is paying rich dividends to the companies. The government has done a lot to make telecom industry infrastructure healthy with support to BSNL and Vodafone Idea. Mittal believes that for a country the size of India, there should be three operators, and the third could be either BSNL or Vodafone Idea.
Government support to BSNL and Vodafone Idea
The government recently converted interest dues of ₹16,133 crore related to deferment of spectrum auction instalments and adjusted gross revenue payments into 33.44% stake in the Vodafone Idea, which is struggling under a burden of over ₹2.2 lakh crore. Regarding monetization of the 5G network, Mittal stated that the company’s focus is entirely on the rollout of the network, and monetization will happen after the network base is ready. The company still has about 100 million 2G customers left, but Mittal stated that the company will not shut down 2G services until the customer base migrates to 4G or 5G.
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