Airtel, Reliance Jio and Vodafone Idea to Delay Tariff Hikes

ICICI Securities said that telecom operators could tweak tariffs by reducing validity on certain plans

By May 26th, 2020 AT 5:19 PM

airtel-reliance-jio-vodafone-idea-delay-tariff-hikes

ICICI Securities on Sunday said that the telecom operators will not hike the telecom tariffs ahead of the floor price recommendations from the Telecom Regulatory Authority of India (TRAI). The firm said that TRAI might view tariff hikes as the industry’s ability to act without policy intervention, a move that ICICI Securities believes would work against telecom operators on floor price recommendation. The telecom operators in India including Bharti Airtel, Vodafone Idea and Reliance Jio proposed floor data prices in the range of Rs 20 to Rs 35 per GB. Additionally, Vodafone Idea and Airtel proposed minimum subscription charges for voice calls apart from data prices. Ram Sewak Sharma, chairman of TRAI told ETTelecom on Tuesday that any discussion on floor prices would happen only after COVID-19 lockdown is lifted.

Telecom Operators Might Not Hit Rs 200 ARPU with Existing Tariff

ICICI Securities said that the telecom operators will continue to witness organic growth in average revenue per user (ARPU) due to increase in 4G penetration and “limited drag from competitive intensity.”

The firm said that 10 million 4G subscriber additions would increase the ARPU by Rs 3 and that the telecom operators require additional tariff hike to reach Rs 200 ARPU.

Gopal Vittal, managing director of Bharti Airtel, said in the earnings call on May 19 that he is hopeful of hitting Rs 200 ARPU in the short term and eventually reach Rs 300.

telecom-operators-rs200-arpu

ICICI Securities said that the telecom operators will wait until the floor prices recommendations of TRAI before hiking the tariffs.

“Floor price can be game changer policy intervention as this may help the industry reconstruct pyramid structure (from almost flat industry structure now) which will help maximize revenue on mobile services, and reduce risk of pricing retraction,” ICICI Securities said in a report.

The firm said that the operators would not hike tariff in the current scenario due to “negative publicity” that would be directed at them as most subscribers face “unprecedented challenging situation” due to COVID-19 outbreak.

“Therefore, we do not see price hike until floor price recommendation is published, which may take another quarter or two at least, in our view,” ICICI Securities said in a report.

Airtel, Vodafone Idea and Reliance Jio Might Tweak Telecom Tariffs

However, ICICI Securities said that the telecom operators might tweak telecom tariff by reducing the validity on certain plans.

“Some tariff tweaking possible such as introduction of higher data allowance plan, which is significantly ARPU accretive, cutting validity from 84days to say 82days or 80days,” ICICI Securities said in a report.

Born in India, Yogesh loves to travel and has lived in multiple countries including New Zealand and Canada. His bylines can be found on various newspapers and blogs throughout the world, including Vancouver Sun, Surrey Now-Leader, Daily Hive , Investing News Network and Rach F1.

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