Telecom tariff will continue to go up

Telcos are targeting ARPU of ₹300, say analysts.

If you think the tariffs on telecom data are unlikely to rise anytime soon, think again. After effecting a 20-25 per cent tariff hike recently, all the major telcos – Bharti Airtel, Reliance Jio and Vodafone Idea – are now gearing up for further hikes in 2022 as well to raise the average revenue per user (ARPU) to ₹200 and then to ₹300.

The highest tariff hikes happened in 2019 with 50-60 per cent, but in 2020 the telcos’ hands were tied due to the pandemic.

Now with the recent hikes in tariff, the trend is expected to continue next year as telcos expand their ARPU.

“In December 2019, telcos implemented a steep tariff hike. There after, with consistent conversion of subscribers from 2G to 4G and some changes in tariff plans, the ARPUs grew. This was a long awaited tariff hike implemented by the telcos and given the low return generation and high capex requirements going forward, some of the telcos have stated that ARPUs should move to around ₹200 in near term and ₹300 in medium term,” Ankit Jain, Assistant Vice President and Sector Head, ICRA, told BusinessLine.

Airtel was the first operator to announce an increase in tariff plans for the prepaid consumers effective November 26.

“We believe that this level of ARPU will enable the substantial investments required in networks and spectrum. Even more important, this will give Airtel the elbow room to roll out 5G in India. Therefore, as a first step, we are taking the lead in rebalancing our tariff during the month of November,” the company had said.

Viability
Sunil Bharti Mittal, Chairman, Bharti Enterprises, earlier this year also said that India has the most affordable tariffs anywhere in the world and the company would not shy away from raising tariff.

“Average consumption isabout 16 GB of data per user per month. It is time that tariffs do take a tick up to make the industry viable and, more importantly, have decent returns on capital to grow into more technology areas, to roll out more networks, and become more viable model of sustainability in the future,” Mittal had said.

Vodafone Idea also had increased its minimum tariff from ₹79 to ₹99, and the maximum to ₹2,899 from ₹2,399, in November.Rjio, which had started the tariff war since its launch in September 2016, also announced the hike in tariff to minimum of ₹91 (for 28 days) from ₹75 earlier and maximum to ₹2,879 from ₹2,399 (for 365 days). The Hindu BusinessLine