Bharti Airtel, India's second-largest telecom operator in India, has been pretty vocal about raising tariffs in India. It is not just raising tariffs, the company has also talked about how the tariffs need to be restructured for better margins for the telcos. Airtel's Average Revenue Per User (ARPU) remained flat at Rs 245 for two straight quarters. This is not a good sign for a company that's boasting of having high paying customers and pushing them to pay more.
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Airtel's MD and Vice-Chairman, Gopal Vittal, said that the tariff structure needs repair. The tariffs in India are still the lowest globally. The tariff structure, acccording to Vittal, is broken. Currently, there's a one-size-fits-all pricing model that's present in India. This needs to change and people who consume more should be asked to pay more.
Vittal said, " India mobile tariff continues to remain one of the lowest globally and needs further repair. We have also said that the current telecom tariff structure in India is broken, with a one-size-fitsall pricing model, which is not appropriate for upgradation, nor is it in line with any other market."
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"Restructuring the tariff architecture is essential to improve financial health of the industry and sustain future investments. This could simply mean reducing data allowances on some of the packs and charging more for those who can afford to pay," Vittal added.
There's no timeline for when the telcos will change the tariff structure, or even "if" they will do it any time soon. But this is what the comment from the top industry person is. There are definitely going to be considerations around this as Jio, the relatively lower cost player compared to Airtel and Vodafone Idea (Vi) is also looking to improve margins on services. This is because Jio is looking to list itself in the stock exchanges.
