Vodafone, Country’s second largest mobile service operator in terms of subscriber base, plans to increase Vodafone voice and data tariffs every year in India, claiming that their current tariffs are at unsustainable levels.
Vodafone India CEO and MD, Marten Peiters in an interview to Press Trust of India said, ” We have lower tariffs for 18 years against inflation of 8-9 percent per year. Now can you do that forever? No, you can’t, So the point has come where lowest has been seen , we will have to increase our tariffs every year depending on cost levels.”
Peiters argues that, The telecommunication industry has to increase its prices like everyone else. He added that last month company increased its 2G mobile tariffs by between 25-30 percent with other companies like Airtel and Idea. But then it reduced its tariff by 80 percent earlier this month.
“We started 6-7 times high tariff rate when we opened up 3G network. It is now back to 1.5-1.6 times of 2G data rates. It over time will come together. But it can’t come over time just by lowering 3G tariff, it needs to also see increase of 2G tariffs. Once it is equal, it doesn’t matter to customer anymore. My assumption is that our price increase will always be lower than inflation but you can’t of-course forever keep lowering your prices, its impossible”, Pieters said.
“India still has the lowest tariffs in the world.I think there is only one country which is coming closer, which is China. The only difference being that in China, there are only three operators, they are very profitable and they invested last year USD 55 billion in telecom infrastructure. We did USD 5 billion, so what’s better for the country,” Pieters added.
Pieters warns of a further hike in 2G mobile internet rates to the point where 2G data rates equate to 3G data rates.
But other telecom companies like Reliance Communications and Aircel are trying to reduce their 3G mobile internet rates by bringing them equal to the 2G mobile internet rates.