Bharti Airtel, India’s second largest telecom operator, said it does not plan to introduce differential tariffs for 4G and 5G data. Managing Director Gopal Vittal was responding to expectations that the company may charge more for 5G data since 5G tends to offer faster connectivity.
“We have been very clear that we dont believe in a higher 5G tariff,” said Vittal, speaking to investors in a post-earnings conference call.
The company currently offers 5G data free of charge to most of its eligible customers under a plan launched in March in response to a similar offer from primary rival Reliance Jio.
Bharti Airtel is believed to be not in favor of offering such freebies, as it believes that doing so is keeping the overall industry revenue and profit low. The company, which generates around Rs 203 from its customers per month on average, has publicly said that the Indian telecom market needs this number to go up to 300 rupees per month per subscriber. Most of the increase, it believes, will come from higher tariffs.
“We’ll continue to strive for an overall hike in tariffs while keeping our service most affordable and delivering quality service.,” Vittal added.
Jio introduced free 5G data in December 2022 for most of its subscribers, except those on low-cost plans.
According to the current 5G data plan introduced by Airtel in response, the consumers who have a data plan of Rs 239 or above can get 5G data free of charge.
The Indian market has seen a sharp decline in data tariffs in recent years.
Prior to the launch of Jio in 2016, telecom services in India remained fairly high with 1GB of data costing Rs 250. The market then was dominated by major players such as Airtel, Vodafone and Idea.
Jio made data services affordable and popular by offering 1 GB per day for around Rs 150 per month, which works out to around Rs 5 per GB. This forced the other companies in the sectors to significantly bring down their tariffs.
As a result of the competition, the average cost of wireless data in the country fell to Rs. 7.70 per GB by early 2019.
However, this also dragged the average revenue that companies were able to generate from one customer to just Rs 74.30 per month, pushing many of them into losses.
By late 2019, Jio and the others started increasing the tariffs to restore the industry to its health.
As of early 2023, the average tariff per GB has been increased to Rs. 10, and the average bill generated by a person has also doubled to Rs 142.32.
Bharti Airtel has also seen a sharp improvement in its revenues. In the three months ended September 2023, the company was generating Rs 203 per month per customer, compared to 190 a year earlier. But the company says that this rate is fairly low and decelerating for the viability of the industry.
“Tariffs are very low in India, both the average revenue per user as well as rate per GB, if we plot these both on two axes then we are right at the bottom on both. Tariffs need to go up, the industry needs to become viable,” Vittal said speaking at an earnings call with investors.
He also stressed on the fact that already two rounds of tariff hike has happened since the launch of Jio, and this makes another tariff hike possible in the near future.
“I will say wait and watch..the question is not about whether it will happen but when it will happen..,” he said.