As per a latest Trai report, telecom operators have recorded an almost 9.5% growth in AGR in the third quarter of FY20. The sequential growth in AGR was mainly because of the price hikes decision by telecom operators last December which didn’t affect the spending pattern of customers. As reported by ET Telecom, the AGR of the entire telecom industry climbed to 9.48% on-quarter to Rs 40,877 crore in the quarter ended December FY20. Not only this, but access services also contributed 74.18% of the total telecom services AGR in the fiscal third quarter.
Tariff Hikes by Telecom Operators Resulted in Strong Growth of AGR
Back in December 2019, telecom operators Bharti Airtel, Reliance Jio and Vodafone Idea increased the prices of prepaid tariffs by around 14-33% for the first time. The move by telecom operators did not adversely impact consumption by customers. Rohan Dhamija, who is a partner at Analysys Mason, stated that strong sequential growth in telecom sector AGR in the third quarter was because of the price hike decision by telecom operators. Trai’s report on the telecom industry’s December quarter performance also showed that the ARPU from wireless services increased from 5.74% on-quarter to Rs 78.65 because of the tariff hikes.
Reliance Jio Picked the Lead on AGR Growth
The largest telecom operator of India Reliance Jio surpassed the telco giants Bharti Airtel and Vodafone Idea in the AGR front. Reliance Jio’s AGR increased from 9.57% on-quarter to Rs 12,631.95 crore in the December quarter. As of Vodafone Idea, the AGR increased by 4.01% to Rs 6,510.97 crore respectively. Bharti Airtel’s revenue from licensed services climbed up 11.63% to Rs 8,143.48 crore. All the telecom operators witnessed positive growth on the AGR front.
Government Earnings Increased in December Quarter
All the telecom operators pay 8% of the total AGR earnings to the government as license fees. Not only this, but the telcos also pay 3-5% towards spectrum usage charge. Since the telecom operators witnessed a positive growth in the December quarter, the government’s license fees and spectrum usage collections increased in the December quarter.