Airtel, Vodafone Idea, Jio Need to Work on Increasing ARPUs for Market Stability

ICRA said that the telecom industry ARPU would have to increase to Rs. 200 in the medium term for viable operations and thus, further tariff hikes cannot be ruled out

airtel-vodafone-idea-jio-increasing-arpus-stability

Reliance Jio, Airtel and Vodafone Idea will have to substantially increase their average revenue per users (ARPUs) to achieve long-term sustainability at a time when the sector is going through a rough financial phase in the wake of AGR-related payment issue.

ICRA said that these telcos need to increase their ARPU annually by 13-30% to be able to meet the AGR related payouts along with the existing debt repayments as well as the spectrum instalments which will start from FY2023.

Brokerage Motilal Oswal said that each player needs an ARPU hike – VIL needs to survive, Jio needs to justify its high valuations in the recent investments and Bharti needs to deleverage.

Industry ARPU needs to reach Rs 200

ICRA said that the telecom industry ARPU would have to increase to Rs. 200 in the medium term for viable operations and thus, further tariff hikes cannot be ruled out. The December tariff hikes have resulted in steady ARPU improvement in the market.

The sector recovery is also substantiated by deleveraging measures undertaken by telcos and moderation of capex intensity, the uncertainties around the AGR issue persist.

Motilal, in its note, said that near-term economic headwinds and history of the last ten years do not paint a pretty picture for the telecom industry; however, lately, the market construct has turned highly favourable. “Nevertheless, any tariff hike is possible only if there is a collective effort on the part of all telcos,” it added.

ICRA said that a consistent increase in data usage and steady up-gradation of customers from lower technologies to 4G would also drive the ARPU growth going forward.

The work from the home regime has resulted in a substantial increase in mobile data usage and has also resulted in general up-trading of ARPUs in terms of customers upgrading their plans for higher data allowance.

“These would necessitate additional investments to augment the network capacity for the surge in demand and might result in additional spectrum requirement as well,” ICRA said.

“We expect that the increase in ARPUs required for various telcos to be in the range of 13-30% annually going forward to be able to meet the AGR related payouts (assuming a 20-year payment term) along with the existing debt repayments as well as the spectrum instalments which will start from FY2023. The industry ARPU will have to increase to Rs. 200 in the medium term for viable operations and thus, further tariff hikes cannot be ruled out,” Anupama Arora, Vice President and Sector Head, Corporate Ratings, ICRA, said.

Chakri is a go-to guy for your next smartphone recommendation. Back in his engineering days, he used to play with smartphones by installing custom ROMs and that passion got him into the tech industry. He still goes nuts about a smartphone knocking his door for review. Currently managing everything at Telecom Talk, Chakri is trying to master PUBG Mobile in his free time.

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Thamilan daa

All the rest here are missed call creatures here thst support 2G and oppose the later technology 3G. Such creatures have lost their common sense.

If u need the useless 2G why haven’t you all appealed to jio to start 2G services?. Answer to the point or $ hut yourselves.

Manish saharan

Jio has 10+10+20 =40mhz(band 5+3+40)
Airtel have 3+10+15+20=48mhz(band 8+3+1+40
Vodafone 10mhz(band 3)
In my village rajasthan

City
sri ganaganagar
Thamilan daa

Tamilnadu :
> Jio has 20 MHz in the 2300 MHz band (but sometimes shows 10 MHz) ; 5 MHz each in the 850 wnd 1800 MHz band.

> Airtel has 2G in 1800 MHz band ; 4G in 1800 MHz, 2100 MHz and 2300 MHz band

> Vodafone has 2G in 900 MHz band ; 3G and 4G in 2100 MHz band ; but vodafone’s own 4G 1800 MHz and idea’s own 2G and 4G 1800 MHz has is not live yet.

BSNL USER

God bless us.

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