Reliance Communications today hiked its voice tariffs by 25%. The base tariffs will now be 1.5 paisa per second as opposed to 1.20 paisa per second. The company said that the competitive intensity of the industry has tapered off, and input costs have gone up. The new tariffs are already applicable in four circles—Madhya Pradesh, Himachal Pradesh, Bihar and Gujarat.
The tariff will applicable to all circles in the next one month. "The new tariff will be applicable across the country in next 30 days. The move will help improve topline revenue and operative margins per user,” the company said in a press release.
Gurdeep Singh, the president of wireless business at RCom said that telecom business is revenue accretive and revenue projections change month-on-month. Singh also said that they are adding subscribers in line with the industry. Recently, the company cleaned up its inactive subscriber base and disconnected many inactive subscriptions. “There is virtual consolidation on the ground and we could see another round of tariff hikes next year,” he said.
Analysts say that tariff hike will be a positive move, but it will take time to reflect in financials of the company. “Right now, I feel that there might be checking if there is elasticity whether it would make a difference in volumes,” said Bhavesh Gandhi, telecom analyst of Indiainfoline.
The last tariff hike by RCom was in August, last year. Though Idea Cellular recently increased its tariffs in Madhya Pradesh, the last round of tariff hikes across all the big players in the industry came last year. Bharti Airtel, Vodafone and Idea Cellular hiked their tariffs in select circles, around 20%. However, newer entrants like Uninor and Sistema Shyam did not follow suit.
This time around too, analysts feel that there might not be competitive tariff hikes by other telecom operators. “Tariffs are very specific to circles, and operators may not go for pan-India hikes at one go. I think we have to wait and see how traffic is affected on this,” said Gandhi.