Connect with us

Headlines of the Day

Telcos expected to increase prepaid tariffs in June 2023

Telecom News India

Telecom service providers may increase prepaid tariffs by the middle of this year to compensate for higher investments and Capex costs for deploying 5G network across the country, analysts said.

“Considering large 5G investments and higher network costs on the addition of 5G equipment to towers, we believe the next 4G prepaid tariff hike could probably be in mid-2023. Pushing tariff hikes closer to 2024 elections raises the risk of political backlash,” IIFL Securities analysts said in a note.

Market and industry watchers had expected that 4G prepaid tariffs could be increased in late 2022, which would be almost a year after the previous round, with some suggesting that the tariffs may see an upswing in the last quarter of the financial year 2023. However, this has not yet happened.

With telcos having made significant investments towards acquiring 5G spectrum and 5G networks leading to net debt-to-Ebitda ratios climbing to over 3x the previous levels for Bharti Airtel and Reliance Jio, telcos have been consistently talking about average revenue per unit (ARPU) remaining still below 2016 level after two rounds of tariff increase in past three years. Ebitda is earnings before interest, taxes, depreciation, and amortization

“Jio’s potential IPO considerations 18-24 months down the line; need to improve Ebitda and free cash flow,” analysts at IIFL said, noting it as one of the reasons for telcos overall to raise tariffs. Incremental revenue market share gains appear to be slowing down for both Jio and Airtel while Vodafone Idea’s share remains steady but at low levels.

Telcos could look at other ways to uplift ARPUs rather than only increase tariffs. Analysts said that the telco may have decided to go slow on tariff hikes, given the risk of further SIM consolidation, which may offset ARPU gains.

A senior Airtel executive has said the 2G-to-4G upgrade, prepaid-to-postpaid conversion, and postpaid-to-broadband conversion could well quadruple ARPU. Since Airtel or any of the telcos are yet to charge premium pricing for 5G, this strategy may bear fruit till mid-year when carriers decide to proactively increase tariffs. Livemint

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2022 Communications Today

error: Content is protected !!