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Phone Calls, Texting and Data Could Soon Be a Budget Burden for Indians, Costs May Surge 30 Per Cent

CC0 / / Phone call
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New Delhi (Sputnik): The past days have turned out to be pretty rough for the Indian telecom industry, especially after India’s top court asked telephone service providers to pay the government their share of adjusted gross revenue (AGR) dues worth $13 billion by 23 January.

Two of India’s largest telecom operators – Vodafone-Idea and Bharti Airtel – with over 422 million and 141.66 million users respectively, are facing hefty losses of $7.2 billion and $3.2 billion in the April-September quarter of 2019.

Indian mobile users could soon be charged 30 per cent more than what they are currently paying for telephone and internet services, to overcome the AGR debts and losses, media reported on Monday.

It’s shocking because in March 2019, a research firm called cable.co.uk revealed that India had the cheapest data packs in the world. While Indians paid just $0.25 approx. (Rs.18) for one gigabyte (GB) of data, average international tariffs for one GB of data are $8.45 approx. (Rs. 600).

In December 2019, Vodafone-Idea, Bharti Airtel and Reliance Jio with a cumulative 369.93 million subscribers revised their tariffs for monthly and bi-monthly prepaid recharge packs and hiked the rates by 40-50 per cent after incorporating a “Fair Usage Policy (FUP)” on all “off-net” calls.

Although the new rates were anticipated to impact consumer spending in India, by up to $6.28 billion (Rs. 45,000 crores), presently the overall telecom-related consumer spending in India is remains among the lowest globally.

Despite the price hikes, the average revenue per user (ARPU) for telecom operators remains at a low.

Due to this, in an attempt to regain financial strength, Indian telecom service providers are expected to surge the prices for their services across the country, say experts.

Currently, Vodafone-Idea needs to pay $ 7.47 billion (approximately INR 53,039 crore) in AGR clearance in the next three days and fears a total collapse.

The troubled telecom provider is exploring further options, including filing a curative petition in the top court.

The AGR serves as a base for most levies including licencing fees and spectrum charges, calculated as a specific percentage of the total amount.

Financial situations in India are expected to get tenser as Indian telcos owe the country's banking sector nearly $114.2 billion (Rs 1.5 lakh crore) in loan-repayments.

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