The frenetically competitive telecom sector in India may have finally been assuaged, with the announcement that market leader Bharti Airtel has increased several of its prepaid tariffs. The news boosted the share prices of many larger Indian operators by up to 16%, with Bharti’s rising by 5.37% and number two operator Reliance Communications’ stock jumping by 14.9%.
On-net prepaid rates are increasing in six of Bharti’s telecom circles – Kerala, Madhya Pradesh, Andhra Pradesh, Rajasthan, Gujarat and Delhi. The operator’s ‘Advantage’ plan has seen a rise of INR0.1 per minute, while the ‘Freedom’ tariff has seen a spike of INR0.02 per second.
One of Bharti’s biggest rivals, Tata Docomo, hiked its prices around two months previously, leading to expectations that other operators will likely take the same course of action in the near future.
HSBC telecoms analyst Rajiv Sharma noted: “We believe these rises are sustainable and expect Bharti to replicate the trend across all product categories and circles over the next few months. Moreover, we expect the competition to follow. It appears that the process has already been initiated.”
Fiercely competitive pricing has driven down the share prices of Indian operators in recent years – since 2009, revenues have climbed just 13% despite a 46% increase in subscriber numbers. Sharma observed: “The slowdown in subscriber additions and decline in share of subscriber net additions for new entrants highlight that the game has shifted to enhancing wallet share from clocking subscriber numbers.”