Bundled Prepaid and Postpaid Plan Prices of Indian Telcos Will Increase by 60 to 80%

The monthly data usage of an average user is currently high due to the high allowance and that an user’s actual requirement could be much lower, ICICI Securities says. According to the report released on Monday by ICICI Securities on the Indian telecom sector, the comments made by telecom operators on floor prices are “quite encouraging.” The telecom operators called for a five times hike on data prices along with minimum subscription charges and fixed cost for voice calls. Additionally, Reliance Jio requested for seperate charges on video on demand (VOD) and other apps. If the telecom regulator accepts the recommendations from telecom operators, ICICI Securities believes that the operators would receive a significant increase in average revenue per user (ARPU) and revenues.

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Telecom Regulator Requires Huge Will For Implementing Recommendations

Reliance Jio in its response to the consultation paper for floor price suggested Rs 20 per GB while Vodafone Idea was on the higher side with its recommended price of Rs 35 per GB. With the current tariff averaging at Rs 4 per GB and if regulator adopts Rs 20 per GB as floor price, an average user will have to shell out five times more. ICICI Securities believes the regulator “may require huge will” for implementing the changes due to the steep increase in tariff.

The firm believes that if the regulator adopts the lowest proposed tariff, it still wouldn’t necessarily translate to huge increase in ARPU for operators as users would downgrade plans based on requirement. However, the bundled plans of 1 GB per day and 1.5 per GB per day would also be set to increase by 60 to 80% under the new proposed tariff. ICICI Securities believes the industry could witness a compound annual growth rate (CAGR) of 16.8% by 2024 to 2025 driven by 19.8% CAGR increase in ARPU.