Private telecom players hike rates, prepaid users to be hit (The Hindu)

Mains Paper 3: Economy
Prelims level: Telecom industry
Mains level: Market competition and its effect in telecom industry

Context:

• Bharti Airtel, Vodafone Idea and Reliance Jio announce up to 40% increase. The era of low tariffs for Indian consumers seems to have ended as major telcos — Vodafone Idea Limited (VIL), Bharti Airtel Limited and Reliance Jio — have increased tariffs by up to 40% for prepaid customers.
• While VIL and Sunil Bharti Mittal-led Bharti Airtel have decided to hike the tariffs with effect from December 3, Mukesh Ambani’s Reliance Jio has decided to implement the hike from December 6.
  90% of market:
• The three telecommunication giants together account for over 90% of India’s 1.18 billion mobile subscribers, with the market share of around 30% each split evenly among them. “New plans will be available across India starting 00:00 hours of December 3, 2019,” a Vodafone Idea statement said.
• Bharti Airtel’s statement read: “Airtel’s new plans represent tariff increases in the range of a mere 50 paise/day to ₹2.85/day and offer generous data and calling benefits.”
• Both Vodafone Idea and Bharti Airtel announced new prepaid plans starting with options of 2 days, 28 days, 84 days and 365 days validity and prices starting from ₹19 and going upto ₹2,399. Reliance Jio is yet to announce its new plans.
• Reliance Jio’s new tariffs will be priced 40% higher, but the company promises to offer 300% more benefits to its customers. “Jio will be introducing new all-in-one plans with unlimited voice and data. These plans will have a fair usage policy for calls to other mobile networks. The new plans will be effective from 6th December 2019,” the company said in a statement.
• The hike in tariffs comes after VIL and Bharti Airtel posted record quarterly losses of ₹50,922 crore and ₹23,045 crore respectively owing to an adverse Supreme Court ruling on the adjusted gross revenue (AGR).

Way ahead:

• Both Vodafone Idea and Bharti Airtel also have an outstanding debt of over ₹1 lakh crore each.
• According to government data, the liabilities in the case of Bharti Airtel add up to nearly ₹35,586 crore, of which ₹21,682 crore is the licence fee and another ₹13,904.01 crore is the spectrum usage charge (SUC) dues (excluding the dues of Telenor and Tata Teleservices). Vodafone Idea has an estimated liability of ₹44,150 crore post the Supreme Court order and made provisioning of ₹25,680 crore in the second quarter this fiscal.
• Commenting on the hike, Chief Marketing Officer of Bharti Airtel Shashwat Sharma said the operator’s new mobile plans offered “tremendous value” and “a superior network experience” on the 4G network.

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Prelims Questions:

Q.1) With reference to the BharatNet, consider the following statements:
1. It was set up by the Government of India in 2012 under the Department of Telecommunications.
2. It was set up for the establishment, management, and operation of the National Optical Fibre Network to provide a minimum of 100 Mbit/s broadband connectivity to all 250,000 gram panchayats in the country.

Which of the statements given above are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None

Ans: C
Mains Questions:
Q.1) What are the effects in telecom sector after hiking the tariffs announced by the telecom companies?