Telecom Operators Likely to Make Quick Call for Tariff Hikes

Tariff hike is said to be on the cards

ICRA, a credit rating agency on Thursday said that the hike in the telecom tariff is “on the cards” as the telecom operators in India are “required to make sizeable payouts” to the government. The firm highlighted that the telecom operators are required to pay for their adjusted gross revenue (AGR) liabilities, auction installments and regular revenue share to the government. The Supreme Court in early September provided a 10-year time period for the telecom operators to pay their AGR dues. ICRA believes that a “sustainable and sizeable” average revenue per user (ARPU) expansion is “critical” from the perspective of the telecom operators to meet their payout obligations.

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ICRA Says Telecom Battleground Shifted to Postpaid Segment

ICRA in a release highlighted that it was “unclear whether the next round of tariff hikes” would be pushed by all operators or “limited” to the operators staring at the AGR dues.

“While the industry still grapples with elevated debt levels and weak debt coverage metrics, the last fiscal has witnessed some respite in terms of steady ARPU improvement driven mainly by the tariff hikes implemented in December 2019, the deleveraging measures undertaken by the telcos, and moderation of capex intensity,” Anupama Arora, vice president and sector head of Corporate Ratings at ICRA, said in the release.

With the introduction of JioPostpaid Plus Plans in September, ICRA said that the postpaid segment has emerged as the new battlefront among the telecom operators. The new JioPostpaid Plus is currently available in multiple tiers including an entry tier priced at Rs 399 and a top-tier plan carrying a price tag of Rs 1499. In early October, Bharti Airtel expanded the availability of its entry-tier postpaid plan priced at Rs 399 to more circles across India.