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Andrew Bonwick
Vice President of Product Development at Relm Insurance
Madhav Sheth
CEO of Ai+ Smartphone
Stephen Rose
CEO Render Networks
India has one of the largest prepaid mobile subscriber bases in the world. Along with that, the data rates are cheapest in the world. The Indian telecom operators have been suffering because of the low prepaid tariffs. It is a general consensus of the industry experts that the prepaid tariff hikes would only be the solution for the telcos to get better returns on their investments. What’s strikingly clear now is that without prepaid tariff hikes, none of the telcos would be able to scale their business fast and in a meaningful manner for their investors.
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Read More – Airtel Brings a New Rs 35 Data Plan for Prepaid Customers
What will Happen if the Tariff Hikes Don’t Come Soon?
Reliance Jio, the telecom operator with the largest wireless subscriber base in India, hasn’t seen a significant rise in quarterly net profit. Just take this into consideration – for Q1 FY23, Jio’s net profit was Rs 4530 crore, and in the following quarter (Q2 FY23), the telco reported a net profit of Rs 4729 crore. In Q1, Jio’s average revenue per user (ARPU) figure stood at Rs 175.7, and in Q2, it increased to Rs 177.2. It is very apparent that Jio’s net profits couldn’t jump much ahead because the ARPU gain was very marginal. Jio won’t be able to boost its ARPU in the short term without any tariff hike.
Let’s talk about Airtel now. Airtel, with the second-largest wireless subscriber base and the highest ARPU. Airtel’s ARPU was Rs 190 in Q2, and the telco reported a net profit of Rs 2145 crore for the quarter. Even if Airtel’s ARPU reaches Rs 200 figure, it would be significantly less considering the return on investments involved. But Airtel can solve that issue by raising the prepaid tariffs and boosting the ARPU to an even higher point than Rs 200. The telco has already taken the initiative to correct tariffs by testing entry-level tariff correction in Haryana and Odisha. While other telcos are yet to follow, ICICI Securities was positive about the move.
