Telcos reduce promotional benefits, cut free minutes

Leading telecom operators, including Bharti Airtel, have increased rates of special tariff vouchers and reduced free minutes usage, barely a month after hiking the price of 2G data plans.

According to market sources, Airtel has reduced free minutes by 10 to 25 per cent and has increased price of SPVs in the range of Rs 5 to Rs 15.

Another operator Idea Cellular has also withdrawn some of the promotional offers in various circles, sources said.

When contacted, an Airtel spokesperson said the revision in prices is in line with increasing costs.

"There is no change in the headline tariff. In most circles we have reduced promotional benefits and free minutes on both acquisition and existing usage," the Airtel spokesperson said.

Shares of Bharti Airtel jumped by 3.46 per cent to trade Rs 363.80 on the BSE, whose main index Sensex was down by nearly 35 points at 1400 hrs.

An Idea Cellular spokesperson refused to comment on reduction in promotional benefits. However, sources at the company said that some of the promotional offers have been withdrawn as the company has to be competitive.

"We have been reiterating that increase in prices is inevitable, which is reflected from the fact that despite rising costs, tariffs have been falling over the past 12 quarters," the Airtel spokesperson said.

The spokesperson added that continuous decline in margins and increasing costs have had an adverse impact of the long-term financial health of the industry.
Airtel and Vodafone have recently increased 2G data tariffs by up to 30 per cent.

Bharti Airtel has maintained for long that prices of voice and non-voice services need to be hiked for the telecom industry to remain healthy, invest in future technologies and generate returns for shareholders.

"The current tariffs do not even cover marginal costs for most operators. So from an economics perspective, do we need to increase prices? The answer is yes," Bharti Airtel CEO (India and South Asia) Sanjay Kapoor had said earlier.

Industry officials say that competitive pressures have prevented telecom operators from hiking rates so far.