Tariffs Should Keep on Increasing to Address the Financial Distress in Telecom Industry: COAI

Reliance Jio entered the Indian telecom market at a time when incumbents like Bharti Airtel, Vodafone India, Idea Cellular and so on are enjoying a purple patch

By December 25th, 2019 AT 10:14 AM
Highlights
  • If the floor pricing comes into place, Bharti Airtel will gain the most
  • COAI approached Trai asking to set a floor price
  • Trai is planning to implement floor pricing in the industry

Over the last few weeks, there has been a long debate going on the internet regarding the latest tariff hike from telcos. Some say that the tariff hike is good for the industry, while some believe that it’s not at all a good move from the operators as they don’t have the capability to provide quality services. Rajan Mathews, the Director General at Cellular Operators Association of India (COAI), believes that the tariff hike should happen to address the financial stress in the industry. Furthermore, he also added that the tariffs would be raised to meet the Rs 200 ARPU. COAI, which represents the telecom operators, also approached Trai to establish a floor pricing for data and voice in the industry, so that the customers can choose their next operator based on the quality.

COAI Waiting to See How New Tariff Plans Impact Customers

Reliance Jio entered the Indian telecom market at a time when incumbents like Bharti Airtel, Vodafone India, Idea Cellular and so on are enjoying a purple patch. ARPU of Airtel and Vodafone Idea used to be over Rs 200 and both the companies used to charge around Rs 250 for 1GB of 4G data. Reliance Jio changed this entirely with its cheap tariff plans and a majority of the customers inclined towards Jio because of the LTE-only network.

To compete with Jio and retain the market share, Airtel and Vodafone Idea came up with new tariff plans which almost matched Reliance Jio.

However, Airtel and Vodafone Idea will no longer be going after Reliance Jio as the telcos are facing several financial issues. There are even talks that Vodafone may exit the Indian market if there’s no relief from the government.

During an interaction with ET Now, Rajan Mathews said that the tariffs would be raised to achieve at least Rs 200 ARPU in the industry. “Yes, we have been saying that tariffs will have to be raised in the short term by at least Rs 200 ARPU and we are trying to get that discipline embedded in the industry,” he added.

Also, COAI approached Trai asking to set a floor price and a consultation paper has been issued as well from the regulator. That said, we believe that a majority of customers are yet to recharge the newly launched prepaid plan because they have been informed earlier about the tariff hike. “There is a 35-40 day lag as the old plans that are already embedded in the industry move out and the new plans take effect,” he added.

More Tariff Hikes Expected in the Coming Months

With Trai floating a consultation paper for setting floor pricing in the industry, it’s a matter of time we see the tariffs go up again in the coming weeks. The latest tariff hike happened just a few weeks ago in the country and it was up to 40%. Trai is currently expecting comments from the stakeholders and others after which it will come up with a solution. It will be interesting to see how the entire floor pricing scenario will work.

If the floor pricing comes into place, Bharti Airtel will gain the most as the telco is currently providing the best 4G services in the country when compared to other telcos like Jio and Vodafone Idea.

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Chakri is a go-to guy for your next smartphone recommendation. Back in his engineering days, he used to play with smartphones by installing custom ROMs and that passion got him into the tech industry. He still goes nuts about a smartphone knocking his door for review. Currently managing everything at Telecom Talk, Chakri is trying to master PUBG Mobile in his free time.

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