InvestorQ : Why are Bharti Airtel and Vodafone increasing the tariffs and how will it impact the market for telecom?
rhea Babu made post

Why are Bharti Airtel and Vodafone increasing the tariffs and how will it impact the market for telecom?

Answer
image
Rutuja Nigam answered.
2 years ago
Follow

The tariff hike by Bharti and Vodafone is mainly to recover some of the AGR charges for which these two telecom companies have already taken a big hit in the second quarter. You may recollect that Bharti reported losses of Rs.27,200 crore while Vodafone reported losses of Rs.50.922 crore for the second quarter. This is the worst profit ever reported by any company in India. Now they need to recover these costs quickly before the next quarter solvency gets hit. That is why the price is being hiked.

It needs to be remembered that this hike in tariff is effective from December only. Obviously, the two telecom companies want to test waters before they jump into the waters. They know that Jio is already giving them both a run for the money and hence if the push tariffs too high then people will shift to Jio. That is something that would be counterproductive for both the players. Both Vodafone and Bharti have improved their ARPUs in the last few months and this may be a temporary affair just to recover the AGR charges payable.

10 Views