Airtel CEO says tariffs have to increase, but won't be the first to hike prices

Airtel said that it is already priced at a premium and if someone else hikes tariffs, it will immediately follow.
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Airtel CEO Gopal Vittal reiterated on Wednesday that customers are paying too little for services, and that tariffs will have to increase. This comes after Airtel posted its highest ever quarterly revenues, with its net loss narrowing to Rs 763 crore. Airtel’s Average Revenue Per User (ARPU) is currently at Rs 162, up from Rs 128 in the same period last year. 

The improved revenue growth came largely on the back of was driven by higher tariffs and a rise in data usage amid the work-from-home trend.

While the price wars began when Jio entered the sector in 2016, the industry has been calling for an increase in tariffs over the past year.

Vittal said that While Airtel’s pricing is already at a premium, beyond a certain point, the premium will become unsustainable. 

“If you can get as much data as you need — unlimited calling and some content that's really an extremely low level of pricing. So, we do believe that ARPU must go to Rs 200 and finally to Rs 300 rupees,” Vittal said during Airtel’s post earnings call.

“But it is a question not really of whether customers can afford to pay because many customers at the upper end of the spectrum can certainly afford to pay a lot more, but the question is the competitive dynamic and the competitive readiness to take a tariff increase,” he added, saying that Airtel is already priced at a premium and if someone else hikes tariffs, it will follow them the next day. 

When asked why Airtel doesn’t want to take the lead in raising tariffs, Vittal said that they don’t want to risk a slowdown in momentum by changing pricing.

“We think we've got a sweet spot, so we don't want to risk any slowdown in momentum by moving pricing at a time when it is uncompetitive. We want to be competitive, but we would welcome a change in tariff, and we will follow immediately,” he added, when asked why they don’t want to take the lead in raising tariffs.

He also said that the company will be staying away from the 5G auctions. 

“The 5G ecosystem is yet to develop here and the prices are very high and we can’t afford them,” he said.

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