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Home / Business News / Airtel hikes minimum monthly recharge for prepaid users

Airtel hikes minimum monthly recharge for prepaid users

business Updated: Dec 29, 2019 20:34 IST
Navadha Pandey
Navadha Pandey
Hindustantimes

New Delhi Bharti Airtel Ltd has raised the minimum monthly recharge for prepaid users to ₹45 with immediate effect from Sunday, more than a year after it set this tariff at ₹35.

This means every Airtel prepaid user will have to pay a minimum of ₹10 more every month to stay on its network.

“It will be mandatory to recharge with a voucher of ₹45 or above every 28 days to avail services,” Bharti Airtel said in a public notice on Sunday.

“In case of non-recharge with a voucher of ₹45 or above at the end of the tariff validity period, Airtel reserves the right to provide the plan benefits in a curtailed manner at its own discretion during the grace period of 15 days. In case of non-recharge of a voucher with ₹45 or above, all services will be suspended post the grace period,” the company said in the notice.

Last month, Bharti Airtel and Vodafone Idea had raised tariffs by as much as 40% (Is this something other than the Rs45 minimum recharge?).

The telecom regulator too earlier this month kick-started a consultation process to determine if regulatory intervention is required in fixing tariffs and the need for a floor price for mobile services, which has come as welcome relief for operators clamouring for tariff increase after waging a three-year battle with Reliance Jio Infocomm Ltd, which brought data prices to rock-bottom.

However, a hike in minimum prepaid monthly recharge is more significant as it hits users at the bottom of the pyramid.

In November 2018, Bharti Airtel had announced that it had set the minimum tariff at Rs35 and through this the company would be able to reduce the number of inactive customers, rein in general selling and administrative expenses, and help focus attention on improving services for better paying users.

The move to further hike the minimum monthly recharge plans comes two months after the operator was hit by an unfavourable court verdict after a 14-year battle between telecom companies and the department of telecommunications on the definition of adjusted gross revenue (AGR) in the sector.

Bharti Airtel has set aside ₹34,260 crore and Vodafone Idea has made provisions for ₹25,677.9 crore in the September quarter after the Supreme Court upheld the government’s definition of revenue, based on which telecom companies pay levies.

As a result, Bharti Airtel posted a massive loss, its highest and second quarterly loss in 14 years, amid a brutal price war unleashed by Reliance Jio that has reshaped India’s telecom market. The New Delhi-based Bharti Airtel swung to a ₹23,045 crore loss in the quarter ended 30 September from a profit of ₹118 crore a year earlier as it set aside money to pay dues to the government.

Vodafone Idea’s loss for the September quarter widened to ₹50,922 crore from ₹4,874 crore in the year earlier.

At the Hindustan Times Leadership earlier this month, Aditya Birla Group chairman Kumar Mangalam Birla had said that the group’s telecom unit, Vodafone Idea, will have to “shut shop” if there was no relief from the government following the apex court ruling on AGR.

Clarity is, however, awaited on the payment timeline and amount as Airtel and Vodafone Idea have filed a review petition on the court ruling.

As of September end, Airtel’s revenue from mobile services in India was ₹10,811 crore, up from ₹10,724 crore in the June quarter. It has 279.43 million users as of September end.

“This is another step in the right direction. Slowly raising rates is a decent strategy given that tariffs have been low for last three years and revenue streams have been under pressure. Consistent periodic revision in tariffs is expected now,” a Mumbai based analyst said requesting anonymity.