Bharti Airtel raises call prices in India, telco stocks gain

Last Updated: Wed, Jan 23, 2013 13:18 hrs

Bharti Airtel Ltd, India's top mobile phone carrier, said it has raised voice call prices to account for rising costs, sending telecommunications shares higher in Mumbai as investors bet that rivals will follow the market leader.

Voice calls account for about 85 percent of the sector's revenues, with mobile data still at a nascent stage. But call rates in India are some of the lowest in the world, often less than 1 cent per minute, squeezing profits at operators.

India's mobile phone market, the world's biggest by customers after China, has not seen a sustained increase in call prices in the last three years after a vicious price war sent call rates tumbling in late 2009.

"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," Bharti Airtel said in a statement on Wednesday.

"This revision in prices is in line with these increasing costs," it said, but gave no details of the increase.

A source familiar with the matter separately told Reuters that Bharti Airtel is reducing free minutes by up to a quarter and has increased prices of some call vouchers for prepaid customers by 5-15 rupees (10 to 30 cents).

The call price increase will be extended to all of India's 22 telecommunications zones in phases, the source said, declining to be identified because the information was confidential.

Shares in Bharti rose more than 4 percent after the news, while rivals Idea Cellular Ltd was up 3.6 percent and Reliance Communications Ltd gained 2.9 percent.

Bharti, Idea and Vodafone Group Plc's Indian unit had raised voice call prices in the middle of 2011 but then had to pare them back after losing market share to competitors.

A spokeswoman for Idea said on Wednesday that her company has raised call prices in some zones by withdrawing what she said were promotional offers but there was no across-the-board increase.

A spokesman for Vodafone India declined to comment.

Competition is easing after several smaller operators either folded or cut back operations, following a Supreme Court order to revoke their permits. Bigger operators have long been expected to increase call prices. ($1 = 53.8150 Indian rupees)

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