The tariff hike in the telecom industry towards the end of 2019 was one of the major moves that shocked the consumers of mobility services. However, it is very well known that a single data tariff hike in the industry is not going to suffice for the telecom companies. Given the gruesome situation of the telecom industry in India, the financial pressure and the debt, the telecom operators are likely to further hike tariff in the coming days. One of the ways, the telecom operators, might be doing it in the coming days is by introducing more options in the 28-days validity strata. This move could give a boost to the Average Revenue Per User (ARPU), for whose higher levels the industry has been vying for. As per an ET report, the introduction of more such higher-priced recharges could mean that the consumers opt for them instead of the 84-days recharge plan, and this might increase the churn of the customers. The churn might increase based on the facts shared by analysts who say that the subscribers on the 28-days plan are more likely to switch operators if they grow dissatisfied by the services.
28-Days Validity Period Attractive for Higher-Priced Plans
According to the analysts, the 12% to 33% rise that has been made in the tariffs in the case of bundled services by the telecom companies, Reliance Jio, Bharti Airtel and Vodafone Idea is not going to be sufficient. For example, one of the plans which offers 2GB data in the 28 days validity period only received a 15% tariff hike to Rs 148. Deutsche Bank said that the telecom operators should introduce more options in the 28-days validity roster, which would include higher data offerings like 5GB, 10GB, and 20GB data. These offerings should then be subsequently priced at Rs 200, Rs 300, and Rs 400 respectively. These bundled plans would help the telecom operators in upping their ARPU by Rs 50.
Telecom Companies Might Get Hurt by Churn
There is also one more positive result which comes if the telecom companies make a switch to a more enhanced 28-days validity roster, and that is the network predictability. More number of 28-days offering for the subscribers would mean that the telecom companies would be able to have better peak hour load management. The analysts also said that number of consumers might migrate to these 28-days validity plans and in these plans, the telcos will be offering more data, but still lesser data as compared to the 84-days validity plans.
According to the Research Head, at SBICapSecurities, Rajiv Sharma, “the risk of customer churn rises on 28-day plans as opposed to the more stable 84-day variants as consumers on the former tend to take calls on switching operators more often if they are unhappy with voice and data experience”.
ARPU Still Hovering at Pre-Jio Levels
There is another prediction in the telecom industry, which says that the telecom companies might hike the prices of their tariff plans by another 25% to 30% by the end of this year. This would be done to boost the ARPU of the companies further. The current ARPU hovers around the Rs 180 to Rs 200 mark, which was the case before the entry of Reliance Jio. The struggle for the telecom companies to ensure lower churn rates while also simultaneously increasing the tariffs to better the ARPU. The Cellular Operators Association of India (COAI) Director-General, Rajan Matthews, also said that the telcos should ensure that they do not lose the high paying customers while trying to expand in the 28-days validity category with higher-priced plans.