Telcos likely to announce another round of tariff hikes

Telecom operators are likely to soon announce another set of tariff hikes as they look to improve their average revenue per user (Arpu) by weeding out low-paying, inactive subscribers. The earlier apprehension regarding hiking tariffs seem to have gone as despite the hikes undertaken in December 2021, the active subscriber base of the industry has risen in the last few months. What the operators have lost are low-end customers, which were mostly inactive, meaning having more than one or two connections.

By weeding out inactive customers from the network, Reliance Jio, for instance, has increased the percentage of its active subscribers, which at February-end reached an all-time high of 94%.

Telecom sector analysts said that with Bharti Airtel focusing on increasing its Arpu further, and Jio leading improving the profile of subscribers on its network, the outlook would remain strong even after another round of tariff hike.

Bharti Airtel expects to reach an Arpu of `200 this year. The company had reported an Arpu of Rs 163 at the end of December. Similarly, Vodafone Idea has been vocal about increasing the Arpu for telecom industry, though the company has not shared any specific number.

As a result of the tariff hikes, the telecom industry has been losing wireless subscribers on a net basis for the past two months, but the active subscriber count has been increasing, meaning, the paying customers are rising. This is happening as telecom is considered as an essential service.

Another analyst said that though the hikes may not happen in the immediate term as the impact of the last round of hikes is yet to fully reflect, but after few months, after the spectrum auctions, telecom operators may look at raising rates as they need to improve profitability. “If 5G has to become successful in the country, Arpu has to rise further. With the current levels of Arpu, there is no business case for any mobile operators to roll out 5G,” said an analyst. Financial Express