In its first price hike in over three years, India’s third-largest telecom firm, Vodafone-Idea, and the second largest, Bharti Airtel, announced increases in tariff rates, starting 1 December, 2019. Customers will now have to shell out more money for mobile calls and data packs.
Reliance Jio, another India-owned telecom firm which rode into the market offering the cheapest data and call plans, started levying minimal charges for calls on rival networks and scrapped plans to improve its performance.
“While the promoters have clearly indicated that they have every intention to stay in India, they are waiting for the government, which has committed to make some recommendations on the issue,” said Rajan Mathews, director general of Cellular Operations Association of India.
Amid speculation that Vodafone could exit the Indian market, CEO Nick Read reaffirmed that the comapny has no intention of exiting the nation, stating instead that the company is in talks with New Delhi to assure all possible support to the firm.
In a letter written to Prime Minister Narendra Modi and Telecom Minister Ravi Shankar Prasad, Read said: "I apologise for the impression that this coverage conveys. However, I wish to put on record that this does not reflect our version,” media reports quoted the letter as saying.
However, pointing out that adverse regulatory environment in India is making business difficult for Vodafone, Read cut the company’s India business value to zero.
Talking about duopoly, which he claimed is difficult in India, Mathews said: “Most countries do not like to have duopoly as it leads to inappropriate pricing arrangements and anti-competitive behaviour, but there is no guarantee that this (duopoly) will happen in India.”
But in a speculative scenario of a duopoly, “data pricing will depend on how market dynamics are”.
Mathews took the standard corporate approach, claiming that a rise in tariffs will improve customer experience.
“Customers are enjoying a bonanza now (in terms of data price and call tariffs) but it has led to deterioration in network quality; operators now feel in order to enhance customer experience they need to raise the tariff.”
India's third-biggest telecom firm, Vodafone-Idea, which was once the country’s largest telecom operator with over 400 million subscribers, is now on shaky ground with a liability of approximately $4 billion due to adjusted gross revenue (AGR) to the Federal Telecom Department.