BANGALORE — India’s mobile subscribers will soon lose the privilege of paying less than everybody else in the world for mobile data plans as the country’s major telcos maneuver to raise prices to improve their profit margins.

The plans come in the wake of India’s Supreme Court in early September ruling that Bharti Airtel, which serves the second-most subscribers in the country, and No. 3 Vodafone Idea each have to pay billions of dollars worth of dues to the government.

The court gave the companies 10 years to pay off their debts. It also gave them a tailor-made excuse to move on from their price war and start raising rates.

“Telecom tariffs in the Indian market are unsustainable,” Ravinder Takkar, Vodafone Idea managing director and CEO, told reporters after the ruling. “And companies are selling below cost, something evident from the profit and loss [accounts] and balance sheets of companies.

“We believe tariffs have to go up at least in the short term. Getting the ARPU (average revenue per user) in the first steps up to 200 rupees ($2.70) is an important step.” Eventually, he added, rates will be in “the 300-rupee range.”

The Supreme Court ruling fell hardest on the joint venture between local conglomerate Aditya Birla Group and U.K.-based Vodafone. Vodafone Idea owes over 504 billion rupees ($6.85 billion) in spectrum usage and other charges. Bharti Airtel has to pay 260 billion rupees. where to buy cheap data in bulk for resale

Jefferies, an international financial advisory firm, said in a research note that the Supreme Court decision could lead to cash outflows of 22% from Bharti’s EBITDA (earnings before interest, taxes, depreciation and amortization) and 111% of Vodafone Idea’s. Telcos will require an ARPU increase of 10% to 27%, according to Jefferies, which added that rate increases are imminent.

If the companies implement a major price hike, India’s data rates are likely to be higher than that of Israel, which is currently only marginally higher than India’s.

The telecom sector had been embroiled in a price war since Reliance Jio, controlled by India’s richest man, Mukesh Ambani, entered the market in 2016 with near-zero rates, killing off some smaller operators. Four years later, it is clear that basement-level rates are not sustainable.

India has the world’s lowest data rates. According to Cable.co.uk, a price comparison website, mobile users in the South Asian country pay between 2 cents and $2.75 for 1 gigabyte of data, while mobile users in China pay between 61 cents and $1.76 per GB.

Americans pay $2.2 to $60.

Sunil Mittal, chairman of Bharti Airtel, had been vocal about price increases even before the court’s decision. At an event in late August, Mittal said that being paid 160 rupees a month for 16 GB of data is a “tragedy,” according to the Press Trust of India.

“[Subscribers] either consume 1.6 GB of capacity per month at [160 rupees], or you may prepare to pay a lot more,” he was quoted as saying. “We are not wanting $50 to $60 like the U.S. or Europe but certainly $2 for 16 GB a month is not sustainable.”

Bharti Airtel managed to increase its ARPU to 157 rupees in the quarter ended June, up 21.7% from the same period last year. Mittal expects his company to achieve an ARPU of 200 rupees in six months. However, Mittal’s remarks indicate that ultimately, he aims to push the ARPU even higher.

Top operator Reliance Jio, unaffected by the court ruling, has been gradually raising data rates since April. The company has already cleared its payment obligation to the government to the tune of 1.9 billion rupees.

The telcos are also under pressure to financially prepare to roll out fifth-generation services, which will include bidding at spectrum auctions and developing infrastructure.

Amitabh Kant, CEO of NITI Aayog, a government policy think tank, believes price rises are necessary. In a letter to the country’s telecom regulator in March, he said, “We would like to strongly emphasize that floor prices are the need of the hour to enable the continuation of a multiplicity of firms that is critical for healthy competition.”

Floor prices are usually set by the government as a price control measure. “Given the heavy debt burden being faced by the [telecom] sector and the recent fall in prices to unsustainable levels, there is no option available but to set floor prices,” he wrote.

Mahesh Uppal, a consultant in telecom regulation, said that while increasing rates was unavoidable, the hikes should be restrained. He pointed out that less than 50% of India’s population has access to mobile data, and affordability remains a big issue.

“I think companies will be careful about the price increase, and not all companies are in the same financial situation,” Uppal said. “I don’t expect the prices to go up very steeply, but some limited amount of prices will be increased.”

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