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Bharti Airtel, Idea Cellular cut back on free minutes

Indian telcos are reducing promotional benefits and freebies, signaling a shift in pricing power back to industry. They also deny earlier reports of tariff hikes.
Written by Ellyne Phneah, Contributor

Bharti Airtel and Idea Cellular have reduced promotional benefits and freebies to customers, but stopped short of hiking their headline tariff rates.

Bharti Airtel told ZDNet Asia on Wednesday that there was no change in tariffs, but that in most circles, the company had reduced promotional benefits and free minutes on both acquisition. "We are committed to enhance value for our customers through continued investments in network, technology, customer experience, and life enriching services," the telco said in a statement.

Similarly, Idea Cellular told First Post in a Wednesday report that the increase was in terms of reduction in promotional benefits, without actually increasing call rates directly.

Airtel denied that it had raised tariff rates, as reported by the Economic Times on Wednesday.

According to the report, the two Indian telcos increased call tariff rates by nearly 100 percent, following the 2G hike by Airtel and Vodafone earlier this month. It said that Airtel doubled its call rates from 1 Indian rupee (US$0.02) per minute to 2 Indian rupees (US$0.04), Idea Cellular's increase had also been steep from 0.012 Indian rupee per second to 0.02 Indian rupee per second.

A source with knowledge on the matter also told Reuters in a separate report that Airtel was reducing free minutes by up to a quarter and had increased prices of some call vouchers for prepaid customers by 5 Indian rupees (US$0.09) to 15 Indian rupees (US$0.28).

When approached by the Economic Timaes, Bharti Airtel had said that the hike was "inevitable" and the revision had been in line with increasing costs. "We have been reiterating that increase in prices is inevitable, which is reflected from the fact that despite rising costs, tariffs have been falling over the past 12 quarters," the telco told the news site.

An Airtel spokesperson clarified that while the point was correct, it had been picked up from an earlier statement and was hence "misleading."

Earlier in January, Airtel had raised the prices of its 2G data plans by 25 percent in a bid to cover costs and improve profit margins, and Vodafone then followed suit and raised prices of its monthly plans by 30 percent.

The substantial increase in rates indicates that pricing power has returned to the telecom sector, with incumbents likely to have more flexibility moving forward, First Post noted.

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