Bharti Airtel Chairman, Sunil Bharti Mittal, recently said that Airtel will not shy away or hesitate to take the first step to hike the tariffs. It wouldn't be the first time Airtel's senior-level executives are saying this. Bharti Airtel has been at the forefront whenever tariff hikes are to be implemented in the industry. To recall, the tariff hike of 2021 was led by Airtel and the decision to remove the Rs 99 plan as the base offer was also implemented by Airtel.
In a conversation with the Economic Times, Mittal mentioned that Airtel has spent around Rs 80,000 crore on the 5G spectrum and rollout while the competition (referring to Jio) has spent more than Rs 1,00,000 on the same. Since there aren't any additional revenues from 5G at the moment, the next natural step for the telcos is to hike the 4G tariffs.
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Mittal said that the time has now come to start rationalising and repairing the tariffs. Airtel's tariffs are already the most expensive in the industry (Vodafone Idea's many tariff plans match Airtel's pricing strategy), and the short-term ARPU (average revenue per user) target of Rs 200 has been achieved by Airtel. Now the telco is looking to reach the Rs 250-300 figure as soon as possible.
With the way Airtel's ARPU is progressing (Rs 208 for Q3 FY24), the telco will likely achieve its ARPU target of Rs 250 with a single hike (if the hike is in the range of 15-20%).
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Rs 300 ARPU is what Airtel Needs Right Now: Mittal
Mittal said that Rs 300 is the figure that Airtel needs now so that it can keep pace with the inflationary pressures that are associated with the cost of rental for towers, administrative costs, employment costs, fuel, etc.
With the trend that everything is becoming expensive, the telcos need to earn more money out of their customers, signalled Mittal.
When Will the Tariff Hike Come?
As per the industry analysts, a tariff hike is expected only after the central elections are over. So one can anticipate that it would come around the seceond half of calendar year 2024.
