Reliance hikes call rates by 25 pc. Rival cos may follow suit

mangaloretoday.com/DHNS

New Delhi, September 21: In signs of mobile phone tariffs going upwards, Reliance Communications increased call rates in four service zones by up to 25 per cent for both post-paid and prepaid customers.

It will implement the new rates across India in the next 30 days. There is speculation that other telecom companies will follow suit.

 

 

Reliance Communications (RCom) increased the base tariff by 25 per cent to 1.5 paisa per second from 1.2 paisa per second, stating that “competitive intensity is tapering off and input costs are rising”.

The company implemented the increase in base tariff in four telecom circles — Bihar, Gujarat, Himachal Pradesh and Madhya Pradesh — two weeks ago.

It will extend the hike to all zones in the next 30 days. Customers seeking new RCom connection will have to pay the increased base tariff. Existing RCom customers, using plans with discounted charges, will have to pay new charges when  their current plans ends.

“Current prices are clearly unsustainable for a profitable growth. There is a clear evidence
of competitive intensity coming down. From now on, we are focusing on average margin per user and not average revenue,” said RCom President and CEO for Wireless Business, Gurdeep Singh.

He said the very reason of competitive intensity started a couple of years ago when market moved to 1 paisa per second and number of players increased from 7 to 14.
Death of 1 paisa

“We have seen the death of 1 paisa in October last year. Less number of players in the market has lowered price intensity on ground. This gives us enough room to redo our pricing,” Singh said.

The Supreme Court in February had cancelled 122 telecom licences belonging to eight companies. Of these eight companies, three have closed their operations in India.