The telcos have been working out ways, planning strategies, and offering newer plans and services to earn more out of each customer. Bharti Airtel has been one company that has been very vocal about how the average revenue per user (ARPU) figure for the Indian Telecom industry is not where it should be. The telco has been pushing for the entire sector to go ahead and focus on improving the ARPU to at least Rs 200 levels in the short term.
This is where Bharti Airtel is headed currently. Speaking at the earnings call, Airtel CEO Gopal Vittal said that the industry’s ARPU is not sustainable. Vittal believes the ARPU for the industry should be at the Rs 200 level in the short-term, while in the long-term, it should be at the Rs 300 level.
Hearing these words from Vittal is a clear indicator of what Bharti Airtel is planning to do. It is not wrong of the telco to earn a higher ARPU. As long a quality service is provided to the consumer and the customer feels like he/she is getting services that are worth it against the money paid, there’s no harm in slightly expensive services.
Rs 300 ARPU Level for Bharti Airtel or Industry Not Possible Without 5G
Without the arrival of 5G, telcos can’t simply keep jacking up prices of their services to earn a higher ARPU. Bharti Airtel’s ARPU in the September 2021 quarter was Rs 153. To reach the figure of Rs 300 in the long-term, the telco would have to increase the prices of its services by 100%.
While a tariff hike is expected in the short-term, even multiple tariff hikes in the medium term won’t set the industry for Rs 300 ARPU levels. 5G plans and services will have to play the role of the catalyst to help with increasing the ARPU for the telecom industry.
Further, it will require each and every player to step up for the initiative. If Airtel and Vodafone Idea (Vi) are going for tariff hikes, Jio needs to follow too. If Jio doesn’t follow, it will handicap Airtel and Vi to go ahead with the tariff hikes.
This is because if Jio is providing much cheaper services than Airtel and Vi, Jio will eat up their market share heavily. At present, the pricing and tariffs structure from all the telcos is almost the same. Telcos can keep slowly hiking prices of 4G plans, but they can go all out with the 5G services.
5G speeds won’t be required by every customer anyhow. So the telcos can ensure that they are creating specialised 5G services best suited to the class of individuals who are going to use it for day to day communication.
5G plans can be bundled with unlimited data and also offer other kinds of benefits, including over-the-top (OTT) subscriptions. Increasing ARPU would mean the customer would have to pay more for the telecom services going forward. While that is something that’s going to trouble a lot of people, in the long-run, many will also appreciate it if the quality services are provided against it.