Announces a sharp reduction in promotional offers

Reliance Communications Ltd. (RCom), on Monday, effected a minimum 20 per cent hike in telecom tariffs to improve profitability. It has also taken steps to cut down on freebies. The new tariffs apply to all existing and new customers with immediate effect, the company said in a statement.

RCom said the tariffs for all its Commitment Plans had been hiked by 20 to 30 per cent. The tariff for Commitment Plan 21 and 45 have been hiked to 1.2 paisa per second from 1 paise per second. A large part of RCom’s customer base used Commitment Plans, the company said. “We have now corrected all Commitment Plans across the country, and have increased tariffs by between 20 per cent and 30 per cent,” said Gurdeep Singh, Chief Executive Officer, Wireless, Reliance Communications, in a statement.

Improved margins

RCom also announced a sharp reduction in promotional and concessional offers to improve its margins. Commitment Plan 48 now offers 160 local on-net minutes, against 500 minutes earlier. Commitment Plan 46 now offers 140 local on-net minutes, against 200 minutes earlier.

The company had also completed the migration of entire base to headline tariffs of 1.5 paise, the only operator in India to do so, it said.

“Our headline tariff increase from 1.2 to 1.5 paisa per second in October last year did not see any traffic elasticity and there has been no fall in customer demand or change in usage patterns, as we successfully migrated our entire base to the headline tariff,” Mr. Singh said.

“With the Indian telecom industry now heading for a phase of consolidation, this will help pricing power move back to serious, long-term and pan-India scale operators and positively impact profitability,” Mr. Singh added.

Shares at 2-year high

Following the announcement, shares of RCom surged to two years high of Rs. 113.30, and closed with a gain of 2.36 per cent at Rs. 112.75 on the BSE.