Q4FY25: Indian Telcos Push for Tariff Reform Amidst Low ARPU

“I want to underscore that industry does need further tariff repair for sustained financial health and to support continued investments and deliver a respectable ROCE to the business,” Vittal concluded.

Responding to a question on tariff architecture, Vittal said, “I think, what options there are, I think, obviously, this cannot be done in isolation, but just to give you a sense of how we see it. The entry-level pricing on the plans—I think those entry-level pricing should potentially not go up, and even if they do, they go up very, very modestly. But the next-level pricing, where there is oodles of data allowance that is put in there—that data allowance should dramatically reduce, and then there should be a reason for people to upgrade to a higher plan. So, from small, medium, large, and extra-large is the way that the architecture should be.”

“To give you an example, if you look at the India price architecture and index entry price at 100 and index the highest price, then the 100 gets to maybe 250, and that is the overall architecture that we look at. But if you compare that with a market like Indonesia, which is a market quite similar to us in terms of its geographical spread, population density, and so on and so forth, then that goes from 100 to 500—and this is just one example. If you look at any market, you will see the stratification. So, I think, that is really what we believe should happen,” Vittal explained.

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For Bharti Hexacom too, post the first full year after being listed, Chief Financial Officer, Bharti Airtel Limited, Soumen Ray, described the company’s performance as “stellar.” “I think whatever we have put up during our road shows, we have been able to do it. The tariff repair has come in very handy, and the increase in dividend should please the stakeholders,” he added.

Reliance Jio

Speaking during the RIL Q4 FY25 analyst call, V Srikanth, CFO, Reliance Industries Limited, said, “Jio is in a very strong performance—customer additions, 5G subscribers, the ARPU going up, and we did not lose customers, or we did not lose the intensity of data consumption too.”

“Jio Platforms [is] up 17 percent on the back of, of course, the leadership in technology, the number of customers added, the ARPU increase, and now we are the world’s largest data company and have 191 million 5G subscribers and ARPU at Rs 206 plus at 13.5 percent,” he added.

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“ARPUs at Rs 206.2—so a little bit of flow-through of the tariff increase and also some bit of more data consumption in this quarter,” said Anshuman Thakur, Head of Strategy, Reliance Jio Infocomm Limited.

If we observe, Reliance Jio hardly talks about ARPU or mentions it, saying ARPU is less. In fact, according to previous reports, Jio terms ARPU as a misnomer. So, there is nothing much Jio worries about regarding ARPU, as the company believes its capacity market share will translate into data consumption market share. In fact, Jio also said its ARPU is higher than the competition if a vis-a-vis comparison is made. More about it can be read from the story linked.

Also Read: Reliance Jio Claims to Have Higher ARPU in the Smartphone Segment

Vodafone Idea

Vodafone Idea has been saying that the industry needs tariff increases for years now and was expecting the industry to take the first initiative.

“Telecom companies have made substantial investments in wireless infrastructure, providing extensive 4G coverage covering almost 99 percent of the population and rolling out 5G networks considered among the fastest in the world,” said Akshaya Moondra, CEO, Vodafone Idea Limited, during the Q4 FY25 earnings call.

“Over the last decade, the wireless operators have made very large investments in acquiring spectrum and expansion of network infrastructure—be it 4G, to address the growing customer demand, or rolling out advanced technology like 5G, where the customer demand is still evolving—to support the Digital India vision of our Honourable Prime Minister.”

“However, the sector faces significant challenges. India has one of the lowest ARPUs in the world, making it challenging for telcos to sustain investment and innovation. The private mobile operators hiked tariffs in July 2024, after more than two years since the previous price increase in November 2021, leading to improvements in ARPU and revenue.”

“However, despite the price increase, the ARPU in India remains one of the lowest globally, and the industry’s ROCE continues to remain below the cost of capital. Further, the telecom sector requires significant investments to support emerging technologies and meet the rapid increase in data consumption. These investment needs are further accelerated by rapid AI advancements.”

“Therefore, to ensure a fair return on significant investments and support future capital expenditure in the telecom industry, further tariff increases are essential. Additionally, the industry needs to move towards a pricing model where heavy data users contribute more proportionally to their higher usage than the current pricing structure, where incremental data usage comes at an extremely low, unsustainable price.”

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Views on Tariff Structure

Responding to an analyst question regarding tariff hikes and any engagement with the government regarding this, as “we’ve been hearing about this from the industry for quite a long time and no progress has been made, despite three tariff hikes happening over the last six years,” Moondra said tariff hikes have nothing to do with the government.

“So, firstly, I think this [Tariff Revision] has nothing to do with the government. This is, I think, to be decided by the industry as to how they want to take it forward. I think you are right that while this discussion has been happening, or this commentary has been happening for some time, we have not seen this converting to reality.”

“I guess this requires a certain action. Somebody needs to take the leap, and maybe others also follow. But ultimately, I think it is not for any single player to be able to make this change.”

“So, it’s an industry thing, which I think, inherent in our commentaries, is that for the tariffs to increase, we believe that the entry-level tariffs are at a decent level. They do not have room to increase very much, because we have a large population who are just using it to have some minimum connectivity.”

“And as I keep on saying, we have moved from an era of zero ARPU to about Rs 5,000 to—between—for a single person, if he wants to use [services] for the full month—200 rupees too; you can meet all your needs at about 600 rupees.”

“So, that has contracted. And fundamentally, the incremental usage comes at a very low price, which should not be the case. So, I think the industry—we will have to find a solution to this. I don’t have any concrete points at this point in time.”

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“But we do believe that that’s the only way the ARPUs can go up. You cannot increase the price uniformly across the board now. It has to be now incremental usage, incremental payment. Of course, it has to be telescopic by nature. Your per unit of consumption will be cheaper if you are consuming more, as happens in any kind of service or commodity that you may be selling,” Moondra explained.

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