India’s Largest Cellular Traffic carrier Bharti Airtel with 174 Million connections took the dare-devil step to arrest the falling Telecom tariffs by a 20% hike to 1.2 Paise/ Second, thus putting an end to 1 Paise / Second call regime few months ago; other operators quietly followed.
Effective Today, Airtel has raised Off-Net [Airtel to other operator] Call Tariffs by 25%. What used to cost 1.2 Paise / Second will now cost 1.5 Paise / Second. However, this comes at a time when other operators are offering several deals – Reliance Mera Pack, Uninor’s i-Gain Bucket Plans and Tata DoCoMo’s Offers in various circles.
What could be Airtel’s strategy behind this move ? One can easily attribute to the maturing subscriber base that has started to focus on network coverage/quality, even if it means paying higher tariff versus the previous trend when subscribers were simply running behind the cheapest offer. Airtel started to cash in on their deeper coverage and have increased tariffs, reduced discounted mins and lowered channel commissions too.
Data suggests that Airtel, Idea and Vodafone have seen increase in capacity utilization and networks are currently running at 80-85% utilization rate. These operators definitely command pricing power, additionally high utilization and the need to expand capacity to handle the rising usage at a time when the leverage level of all operators is relatively high too has been a factor. However, rapid rise in rev / min beyond certain limit will attract political / regulatory attention for sure.