Business » Monday, May 6, 2013
400 Taken Table mailed to Bibhu RCom Raises Call Rates In Discounted Tariffs Deepali Gupta Mumbai In view of its successful increase of headline call rates, Reliance Communications has now embarked upon increasing tariffs of its bulk discounted calling plans, said a senior company official. The company is decreasing the available talk-time on fixed larger plans and effective rate per minute in a range of 20%-60%. "The operative thing to note is that we have not found any change in usage since our last price increase in October," said Gurdeep Singh, chief executive wireless business at Reliance Communications. All the company'S mobile users have been migrated to the 25% higher headline tariff plan that the company had initiated last year. It was the single largest tariff hike effected by the Anil Ambani company and the second bold step undertaken by the debt-ridden telco after it disconnected phone connections of subscribers who had not used their phones for two months, resulting in its customer declining. As per the new price increase people enjoying lower tariffs through bulk plans, or packs as they are commonly called will now also pay a higher price. An analyst who asked not to be named said the increase should add nearly 4-5% to the Anil Ambani flagship company'S operating profit. The previous hike should have added around 7% but the April-June quarter is when the full impact will be seen, he said. As in the previous case, Singh said it will take 6 months to migrate all the customers to the new tariff plans. Reliance Communciations tends to offer among the lowest rates in the industry and has lower average revenue per user than even some of its smaller competitors like Idea Cellular. However, Singh said the company is now no longer focusing at other parameters and continues to direct attention on profitability per user. In October, the company had revised its base price from 1.2 paise per second to 1.5 paise. Rivals such as Vodafone, Idea Cellular and Aircel did not respond to ET'S email on whether they too planned tariff hikes. However, most of them do not have immediate plans to rate changes. "We have no plans to revise headline tariffs anywhere in India. Reduction of discounts and promotional offers is a part of our ongoing strategy," said the Bharti Airtel spokesman. In mid-2011, all mobile phone companies began raising tariffs by about 20%, the first call rate hike after three years of savage price cuts. This process was done in a phased manner and was completed only in March. Last year Idea Cellular had raised tariffs by 15-20% in Madhya Pradesh and was slated to extend this to the rest of the country, as the industry tries to enforce price discipline and put the cut-throat competition of 2008-11 firmly behind it. Bharti and Vodafone have maintained that such increase in rates typically do not improve revenue or profits because they are offset by sporadic offers on other plans. At present most are offering discounted Internet or data usage plans. The mobile boom of the past decade is primarily attributed to the sharp and continuous fall in call rates. Two analysts said Reliance Communications can well use the additional income to repay its massive net debt that stood at Rs 37,360 crore at last count.