Tariff Hike to help Telcos Get About 20% Higher APRU: ICICI Securities

ICICI Securities said that tariff hikes will help Bharti Airtel and Vodafone Idea (Vi) grow their average revenue per user (ARPU) by up to 20% in the FY22

tariff-hike-to-help-telcos-icici-securitise

ICICI Securities through a report said that the next round of tariff hikes for the telecom industry could come as early as March 2021. In the same report, ICICI Securities also mentioned that it would help telcos such as Bharti Airtel and Vodafone Idea (Vi) grow their average revenue per user (ARPU) by up to 20% in the FY22. Last year, during the same time as now, tariff hikes by up to 25% to 40% were implemented by the telecom operators of the country. Another round of hikes was expected to take place in CY20, but because of the pandemic and slowdown of the economy, that didn’t happen.

Telecom Operators Want Data Tariffs to Go Up by 5 to 9 Times

The Telecom Regulatory Authority of India (Trai) floated a consultation paper seeking to understand the floor prices that should be set on telecom services. To this, the operators said that the current data prices should go up by 5 to 9 times. Trai is yet to announce a final verdict on this.

As per ET Telecom, ICICI Securities in its report said that VIL should be the first company in India to increase the tariffs, what the company is waiting for is clarity on the floor prices to be set by Trai. It further said that the tariff hikes would come by March 2021.

After the tariff hikes, ICICI Securities estimates that the ARPU for Bharti Airtel and Vodafone Idea would grow by 20%. The brokerage firm believes that Vi requires at least a 50% jump on its tariffs to be able to reach the breakeven line in FY23 and be looked at as a going concern.

One thing to remember here is that even after the tariff hikes last year, telcos couldn’t really benefit much. It is because of the Adjusted Gross Revenue (AGR) case verdict that came in earlier this year asking telcos to pay thousands of crores as outstanding AGR dues in the next 10 years.

Now another case on whether the telcos need to pay the AGR dues advance before March 31, 2021, is going on. If the telcos lose this one, it will further the negative impact on the telecom industry.

Tanay is someone with whom you can chill and talk about technology and life. A fitness enthusiast and cricketer, he loves to read and write.

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