Mobile Broadband Penetration Approaching All-Time High, Result Could be Increased Tariffs

Reliance Jio’s entry to the telecom industry back in FY17 had bruised revenues and kick-started the data tariff war in the sector. As a result, the Average Revenue Per User (ARPU), a key industry parameter, had dipped by 38% after the coming of Reliance Jio. However, now as per a new ET Telecom report, telecom operators are expected to raise tariff prices as the mobile broadband subscriber penetration reaches 65%. As smartphone users grow addicted to increasing data usage, and as data demand surges in the industry, the ARPU levels are expected to return to pre-Jio levels with the beginning of the rise starting in mid FY20 and tapering off by March 2022.

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Reliance Jio’s Probable Reason for Increasing Tariff Prices

It was known that by the end of the third quarter of FY19, Reliance Jio had 280 million mobile broadband subscribers, Vodafone Idea had 120 million mobile broadband subscribers and Bharti Airtel had 123 million mobile broadband subscribers. But in the last quarter of FY19, it became clear that Reliance Jio boasted of 300 million subscribers. However, there is also a new report which has highlighted that Reliance Jio might be in dire need for Rs 9,000 crore worth of funds to keep its Special Purpose Vehicle (SPV) intact which were initially created to hold its demerged tower and fibre assets. There is also the issue that rival telecom companies like Bharti Airtel and Vodafone Idea are also planning to raise massive amounts of funds to keep their capex high.