Telecom tribunal asks Airtel, Vodafone to justify tariff hikes

Hindustan Times | ByArchana Khatri, New Delhi
Sep 12, 2007 11:06 PM IST

The tribunal will offer its verdict after the group's counter-response, reports Archana Khatri.

Telecom industry tribunal TDSAT, a semi-judicial body, responding to a petition from activist group Telecom Watchdog, has given notices to Bharti Airtel, Vodafone Essar and Idea Cellular to explain to the voluntary group in three weeks why they hiked tariffs in the month of August. The tribunal will offer its verdict after the group's counter-response.

HT Image
HT Image

The final hearing of the petition filed by Telecom Watchdog on September 5 against the tariff hikes carried out by the three operators offering GSM technology-based services will take place on November 19.

Last month, Bharti Airtel and Vodafone Essar (which controls the Hutch brand that has changed hands) had hiked local call charges and local SMS charges by 20 per cent and STD call charges by 20 to 32.5 per cent under some of their tariff plans. Together, the three groups Bharti Airtel, Vodafone Essar, and Idea enjoy 86 per cent market share of the GSM mobile telecom services amongst private operators.

TDSAT has also for a second time since the plea was filed again questioned TRAI on the lack of intervention against tariff hikes, saying the quality of service had deteriorated. TRAI has said that it has been only a month since the tariff hike and it has been watching the reaction of other operators.

The telecom operators have repeatedly raised the issue of falling average revenue per user (ARPU) to justify their tariff hikes. In the last one year, EBITDA (earning before tax, interest, depreciation and amortisation) margins have been stagnant or have increased only by 8 to 10 percent, while the subscriber rate is increasing by 40 to 45 percent. In 2005-06, while the EBITIDA margin and revenue doubled, the subscriber base increased by 60 to 70 percent.

Prashant Singhal, telecom industry analyst at consultancy firm Ernst &Young says that the lifetime validity scheme for numbers, which is 30 to 40 percent of the market, also results in a no-gain situation. “Ideally the operators should have resorted to increasing service by offering M-Commerce (mobile commerce) and value added services, and then gone for the tariff hike," Singhal told Hindustan Times.

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