A lot of hype has been building around the tariffs that have been sustaining in the telecom industry for a long now. The telecom companies have been suffering under the balance of their lofty balance sheets, which are filled with obscure losses and dues. Even the hotshots have not been spared of the financial bloodbath of the telecom industry; however, it all had to come crashing down one day, and that day does not seem to be far away now. The flag is now being borne by Bharti Airtel for this bold move. All of this development has been brewing for the last few years in the telecom sector, but the showdown for it is about to happen in the form of a tariff hike on the plans.
The first resemblance of a tariff hike came from Bharti Airtel when it removed its baseline prepaid plans. To recall, the Sunil Bharti Mittal led telecom company has removed its prepaid plans of Rs 49. The subscribers who simply needed to keep their numbers running found this to be the plan of their choice. However, now the subscribers were asked to upgrade to the Rs 79 prepaid plan, which would become the baseline for a monthly subscription of an Airtel number, sans any fancy benefit. Now, it seems Bharti Airtel would be pushing this baseline further to Rs 99.
The ARPU Crunch
While the consumers might look at this move with raised eyebrows, the same is not true for the telecom industry. The other telcos are probably going to cheer for Bharti Airtel while following suit. Vodafone Idea is surely likely to chip in with a tariff hike of its own, following in the footsteps of Airtel. The ARPU (Average Revenue Per User), which is the crucial metric for judging the financial health of a telecom company, has come dwindling down to the levels of Rs 140, and for a sustainable future of these companies, these rates need to be back again to Rs 200 levels. Bharti Airtel has been one telecom company that has chased the ARPU figure relentlessly at the cost of losing subscribers and other losses, but it has surely paid off.
It also goes without saying that if there was any telecom operator in the sector which was capable of pulling such a move, it was Bharti Airtel. Vodafone Idea’s churn rate is exorbitantly high, which make even the idea of a tariff hike a mere silver lining for the company. Meanwhile, Reliance Jio has a lot of subscribers from the JioPhone segment, which has a whole another demographic with low spending capability.
With the highest number of active subscribers under its umbrella, Bharti Airtel fit the picture of the anti-hero of the industry, which had to take the bold move and lead the industry towards a somewhat optimistic financial situation. Sunil Bharti Mittal had remarked about the plans of not shying away from a tariff hike when push comes to shove, and it seems that the moment for that is just around the corner.
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