Airtel, Vodafone Will Increase Their Tariff From December 1st: 2 Reasons Why This Is Unusual

Airtel, Vodafone Will Increase Their Tariff From December 1st: 2 Reasons Why This Is Unusual
Airtel, Vodafone Will Increase Their Tariff From December 1st: 2 Reasons Why This Is Unusual

In an unprecedented move which was not expected, both Airtel and Vodafone-Idea has declared that they will increase their tariffs for all users, starting December 1st.

This is an unusual scenario, and there are two reasons behind this.

Keep reading to find out the truth!

Airtel, Vodafone Will Hike Their Rates From December 1st

First, it was Vodafone which announced that their tariff will be increased after December 1st.

And then within minutes, it was Airtel which declared that they will also hike their tariffs, starting December 1st.

Interestingly, the language of their statements are almost similar.

In their statement, Airtel said, “We understand that Trai (Telecom Regulatory Authority of India) is likely to initiate a consultation for bringing rationality in pricing in the Indian mobile sector, which has been operating at prices that have been eroding the viability of the sector,”, adding, “Accordingly, Airtel will appropriately increase price offerings in the month beginning December.”

Whereas Vodafone in their statement stated, “Mobile data charges in India are by far the cheapest in the world even as the demand for mobile data services continues to grow rapidly … To ensure that its customers continue to enjoy world class digital experiences, Vodafone Idea will suitably increase the prices of its tariffs effective 1 December 2019,”

In their statements, both the telecom operators are focusing on the price disruption in the telecom sector, and justifying their price hike by promising better services.

Share market has reacted positively to the news, as share prices of both Airtel and Vodafone took a positive plunge: Airtel’s shares were up by 5%, while Vodafone shares were by 28% at the time of writing.

2 Reasons Why This Is Unusual

Reason #1: Vodafone-Idea recently declared revenue loss of Rs 50,941 crore for the quarter ending September 30, 2019, which is the highest ever loss reported by any Indian company, ever.

Whereas Airtel reported massive loss of Rs 23,045 quarter for quarter ending on September 30, 2019.

Now, under these circumstances, when both of these telcos are incurring huge losses,it is highly unusual that they both will increase tariff, and potentially lose their existing users.

Once the price hike happened, it would be an advantage for Jio, as existing Airtel and Vodafone users will migrate to cheaper Jio plans.

Jio with 34 crore users is right now India’s biggest telecom operator, whereas Vodafone-Idea with 31 crore users is at #2, and Airtel with 28 crore users is at #3 position. 

Reason #2: Never in the history of Indian telecom, any company has just merely ‘announced’ a price hike, without actually stating how much is the hike.

This is the first time that Airtel and Vodafone, both have just announced a price hike, and didn’t reveal the exact increase in tariff.

Due to the improvement in share price, Airtel gained $5 billion in their market cap, while Vodafone added $1 billion.

Highly unusual scenatio out here.

We will keep you updated, as more details come in.

Sources: 1, 2, 3

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