Telcos Unlikely to Increase Tariffs Due to Stiff Competition
Telcos are unlikely to raise tariffs as a reaction to the Supreme Court order which has upheld an expanded definition of Adjusted Gross Revenue (AGR), which has put Rs 92,000 crore as pending dues to be paid by telecom carriers.
A senior telecom executive said in a highly sensitive market like India, a tariff hike is not on the mind as it is not possible since rivals will use that as an opportunity to lure customers. Tariff hike is not the solution to the issue that has emerged out of the order, the executive added.
The Supreme Court on Thursday upheld the definition of adjusted gross revenue (AGR) provided by the Department of Telecommunications (DoT), putting an end to a 14-year old legal battle between telecom operators and the government.
Recently, Reliance Jio ended its three-year free voice run after Trai issued a new consultation paper to examine if interconnect charges should be continued for some more time or end in in 2020.
Analysts said India's telecom war could end super-cheap tariff structure soon. Credit Suisse said that the incumbents may raise some tariffs by giving more data or value added services once Trai provides clarity on interconnect usage charges after January 2020.
So far, incumbents have not responded with a similar hike in tariffs but it is expected that they will follow suit - sooner or later - because of their own distressed financial situation. Airtel, for instance, posted net losses of Rs 2,392.2 crore in the quarter ended June 2019. Vodafone Idea recorded net loss of Rs 4,873.9 crore in the same quarter.
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