Airtel and Idea change tariffs to rationalize rates

Airtel and Idea change tariffs to rationalize ratesBharti Airtel and Idea Cellular, the country's top two mobile operators, on Wednesday announced some changes in tariffs in the prepaid segment, with a sole aim to enhance their revenues.

Both Airtel and Idea announced that while they had not hiked headline tariff (the pulse/second rate), some promotional offers, discounts and free minutes had been withdrawn from some schemes in certain circles.

The companies hiked effective tariffs on special value vouchers by 8-25 per cent, and also decreased the validity of lifetime recharge vouchers for their respective prepaid cards by around 50 per cent in some circles. They also hiked the threshold limit that customers have to shell out for full-talktime plans.

Either decreasing the talktime on prepaid vouchers or reducing the validity period without increasing the price of prepaid vouchers will allow the operators to increase their realizable rates.

Explaining the rationale behind the move, Hemant Joshi of Deloitte Haskins & Sells said, "Let's assume an operator is generating 1 billion minutes per day. An increase of 1 paisa per minute would increase annual revenue by R360 crore. Being a volume game, small increases can benefit the sector."

The prepaid segment accounts for more than 85 per cent of both of the two mobile phone operators' revenues.

Vodafone India, the country's third largest mobile phone operator, has not hike tariffs as yet, but dropped a strong hint that it may follow suit. Vodafone welcomed the move by the two operators, and said rationalization of rates had become inevitable due to the steep increases in input and energy prices in the country.