Bharti Airtel , India's top mobile carrier, has raised call prices by up to 20 percent for prepaid users in some of its Indian telecoms zones, a source with knowledge of the development said on Friday, as firms struggle with high costs in a market that has one of the world's cheapest call rates.
India is the world's fastest-growing mobile market by subscriber additions and is the second biggest after China with its 840 million mobile connections. Carriers, however, operate under wafer-thin margins after a vicious price war in the 15-player market led to sharp drops in prices in late 2009.
Also, companies spent a total $24 billion in a state auction last year to buy radio airwaves for third-generation (3G) and broadband services, with most of it funded by debt.
"Telecom is probably the only industry where despite increasing inflation, tariffs have been falling unabatedly," Bharti said in a statement on Friday.
"Continuously declining margins, high 3G & BWA (broadband wireless access) auction prices, constrained spectrum and rural role out aspirations leave us with little choice but to make some price corrections," it said, declining to elaborate.
Bharti last year acquired mobile operations in 15 African countries from Kuwait's Zain in a $9 billion deal that made it the world's fifth-biggest mobile carrier by subscribers.
It has about 170 million mobile customers in India and operates in all 22 telecoms zones in the country.
Close to 95 percent of India's mobile subscribers are from the prepaid segment, without any monthly contract with the carrier. These users typically spend less compared with those on contract.
Bharti's price increase follows a similar move by smaller rival Tata Teleservices, which last month increased prices in some of the telecoms zones. (Reporting by Devidutta Tripathy; Editing by Aradhana Aravindan)