Airtel hikes call charges by 20%

Airtel hikes call charges by 20%

New Delhi: Shares of Bharti Airtel Ltd, India’s largest telecom service provider by users, rose about 4% in Mumbai on Friday after the company increased call charges in six circles by 20%, the first such increase in about three years.

The stock rose to Rs410.95 at the end of trading on the Bombay Stock Exchange. The increase in call charges will only be applicable to prepaid users, or those who use stored value cards, of the company’s mobile phone services.

Many operators across the country have been experimenting with some form of increase in tariffs, according to a Mumbai-based analyst, who requested anonymity as his company does not allow him to speak to reporters. Operators like Tata DOCOMO, which started the 2009 tariff war, increased rates in the lucrative Tamil Nadu circle last month, the analyst said.

Telecom is a sector where despite rising inflation, tariffs have been falling continuously, Bharti said in a statement.

“Continuously declining margins, high 3G and BWA (Broadband Wireless Access) auction prices, constrained spectrum and rural roll out aspirations leave us with little choice but to make some price corrections," the statement said.

Bharti also announced an increase in its Airtel Advantage pack of prepaid connections, across the country. The new rate will be effective 22 July, the company’s advertisement in The Times of India newspaper said on Friday.

Bharti said that users of its Advantage packs, which are based on per minute billing, will have to pay 0.60 a minute for calls within India to mobile phones and .90 for calls to landline phones.

The cost of local and national texts have also been increased to Rs1 and Rs1.5 respectively.

Tariffs of its “Freedom" pack, which is based on per second billing will remain unchanged. The increase in tariffs will help operators boost profitability and sustain their businesses.

India’s telecom operators started a tariff war in July 2009, crimping profits. In addition, the companies also had to pay large sums to use spectrum in an auction held in mid 2010. Tariffs have, however, remained stable for the past 2-3 quarters.

The decline in the number of subscriber additions in recent months may have also prompted operators to increase rates as they believe that the lucrative urban markets have saturated while the largely money-losing rural markets are where maximum subscriber addition is taking place, the analyst cited above said.

Rajiv Bawa, chief corporate affairs officer at Uninor, the joint venture firm of Norway-based Telenor group and property developer Unitech Ltd, said in a statement that as a small and relatively new entrant, it would have to remain “very attractive to its trade and customers".

“However, we will watch this move by the industry leader carefully to see the actual changes on the ground. We will support rationality in the industry in a manner that mobile services continue to remain affordable for customers," Bawa said.