Mobile phone users in India might soon see an increase in their bills as telecom companies are planning for another round of tariff hikes, as per a recent report from brokerage firm Axis Capital.
This increase in prices is expected to increase the telecom operators’ average revenue per user (ARPU).
According to the report, telecom operators are likely to implement a hike of around 25% soon.
“We expect a meaningful hike of around 25% by the operators in the near term on the back of a stable competitive environment, their need to improve profitability following heavy 5G investment, and continued government support,” ET quoted the report as saying.
The report said that despite the hike, the increase should be manageable for both urban and rural users, especially given the steady demand for data services.
For urban households, telecom expenditure is projected to rise from 3.2% to 3.6% of total spending, while for rural subscribers, it would increase from 5.2% to 5.9%.
The anticipated 25% rise in headline rates would translate into a 16% growth in ARPU for telecom giants like Bharti Airtel (expected to reach Rs 29) and Jio (expected to reach Rs 26), according to Axis Capital estimates.
Jio recorded an ARPU of Rs 181.7 for the quarter ending March, whereas Bharti Airtel and Vodafone Idea (Vi) reported ARPU figures of Rs 208 and Rs 145 respectively for the October-December 2023 period.
Bharti Airtel and Vi are yet to disclose their March quarter figures.
Operators are strategising to monetise their 5G infrastructure investments by revising tariff structures of bundled packages, stated Peeyush Vaish, TMT industry leader at Deloitte, South Asia as quoted by The Economic Times (ET).
Read More: Lok Sabha elections 2024: Here’s how to download voter ID card online in just 5 minutes
He anticipates a 10-15% increase in ARPUs, adding approximately Rs 100 per subscriber by the end of this year, partly due to price adjustments for 4G/5G bundled packs and the phasing out of low-value plans.
Vaish explained that consumers are likely to stick with their providers as long as they receive high-speed connectivity, demonstrating a willingness to pay for telecom services.
Analysts foresee Bharti Airtel and Jio as the primary beneficiaries of the wireless pack price hikes.
A report by Kotak Institutional Equities highlighted that these two companies saw a 58% and 33% surge in ARPU respectively between September 2019 and September 2023, following three successive tariff increases which ranged from 14% to 102%.
During the same period, Vi observed a 33% rise in ARPU, although its overall wireless revenue dipped by 7%.
Despite Vi’s consistent loss of subscribers offsetting the benefits of tariff hikes and upgradation of subscribers from low-value packs, Vi’s wireless revenue remains lower than pre-hike levels (September 2019), as per a Mumbai-based brokerage as quoted by ET.
Read More: What are benefits of UIDAI’s mAadhaar app? Check steps to create profile
Vi’s CEO Akshaya Moondra has previously said that the company‘s focus is on upgrading its 2G subscribers (comprising nearly 42% of its total base), which is impacting ARPU growth.
