Exploring alternative measures to increase ARPUs, since tariff hikes after elections

Telecom providers Reliance Jio, Bharti Airtel, and Vodafone Idea (Vi) are implementing measures to increase their average revenue per user (ARPU) without raising tariffs. These measures include blocking incoming calls once the plan expires and limiting the number of data top-ups after the voice validity period ends.

However, analysts suggest that a significant increase in ARPU will only occur when tariffs are raised, which is not expected before the upcoming general elections.

The aim of these initiatives is to prompt users to recharge their plans promptly upon expiry, ensuring a steady flow of revenue. Limiting data top-ups encourages customers to upgrade to higher-priced data plans with larger allocations. Among the telcos, Bharti Airtel is the strictest in blocking incoming calls after the grace period.

While blocking incoming calls for customers who have not topped up is a common industry practice, experts believe that such measures are not a long-term solution for substantial ARPU growth. Bharti Airtel and Jio reported marginal to flat ARPU growth in the fourth quarter, while Vi’s financials for the quarter are yet to be disclosed.

Analysts suggest that telcos should carefully evaluate the implementation of these strategies, balancing customer satisfaction and revenue growth to maintain a positive customer experience. However, significant ARPU growth can only be achieved through headline tariff hikes, which are likely to occur after the general elections in the first half of 2024.

Both Vi and Bharti Airtel have expressed concerns over pricing, with Bharti Airtel’s CEO calling India’s telecom pricing structure “broken.” Vi’s chief emphasised the need for tariff norms to shift towards a “pay for what you use” structure. The last tariff hikes in India were seen in November-December 2021, and since then, there have been no significant increases in prepaid tariffs.

Although there were expectations of postpaid tariff hikes due to the narrowing gap between prepaid and postpaid pricing, analysts now believe it is unlikely, as Jio is aggressively targeting a larger market share in the postpaid segment with competitively priced plans. BW Businessworld