Telecommunications services majors Bharti Airtel and Vodafone Idea will raise their tariffs next month, for the first time in over a decade, Mint reported on Monday citing separate statements made by the two firms. The decision to revise the rates comes in the face of the two companies posting historic losses for the second quarter of 2019-’20: Rs 50,922 crore for Vodafone Idea and Rs 23,045 crore for Bharti Airtel. Vodafone Idea’s loss is the biggest in the history of India Inc.
However, the telecom firms did not say by how much they would increase their tariffs. Telecom prices in India are currently the cheapest in the world, according to Mint.
The firms posted huge quarterly losses because of an adverse Supreme Court judgement last month that upheld the Centre’s broader definition of revenue, based on which it calculates levies on telecom operators. In its order, the top court had excluded revenue from non-core telecom operations, such as rent, dividend and interest income in the reporting of financial results. The court had rejected the definition of adjusted gross revenue that the telecom operators had proposed.
Subsequently, the Department of Telecommunications of the Union government asked telecom operators to assess their dues and pay them within three months. Bharti Airtel, in a statement on Thursday, said it has provided for an additional amount of Rs 28,450 crore as a charge for the July to September quarter. On the other hand, Vodafone Idea said in a statement with the BSE that “the company has recognised a charge of Rs 256.8 billion [Rs 25,680 crore] in the financial statements”.
Finance Minister Nirmala Sitharaman had said on Thursday that she does not want any telecom firm to shut down. Her comment came after Vodafone Group Plc Chief Executive Officer Nick Read said: “If you don’t get the remedies being suggested, the situation is critical.” According to Bloomberg, he added: “If you’re not a going concern, you’re moving into a liquidation scenario – can’t get any clearer than that.” Read later claimed that he had been misquoted.
In its statement on Monday, Vodafone Idea said it “will continue to actively invest in making its network future-fit by embedding new age technologies and launching new products/services to cater to the evolving needs of its over 300 million customers”.
Bharti Airtel, on the other hand, said: “While continuing to provide affordable tariffs to customers, it [price hike] 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 customer.”