Telecom operators are facing massive financial distress due to various reasons. One of the major contributing factors to financial instability is the massive AGR dues. COAI director general Rajan Mathews stated that for luring investments in technology and infrastructure in the near future, telecom operators have to double their ARPU to Rs 300 in the next two years. As reported by ET Telecom, the ARPU of telecom operators is Rs 150 in the current scenario, which must be doubled for the good health of the telecom industry.
Subscribers Will Face the Burden of Tariff Hike
In order to double the ARPU, telecom operators will have to increase the tariff. However, the tariff hike burden will be directly shifted to subscribers. Rajan Mathews stated that telecom operators would have to get Rs 200 ARPU by the end of this year and Rs 300 by the end of next year for surviving the financial distress. As the ARPU will grow telecom operators will be able to invest in networks, and it will aid the telecom sector. Mathews further noted that after the pandemic subscribers would adopt more mobile-based applications and solutions.
Double Tariff Hike Will Be Affordable for Subscribers
Rajan Mathews stated some facts from COAI survey and stated that the average annual income of a person is currently around $2,600 and a person just spends less than 1 % on his phone bills. Earlier, a person spent about 5 or 6% of his income towards mobile services. So, even if the tariff hike is doubled, it will be affordable for subscribers.
Telecom Operators May Face Added Financial Pressure
The ongoing geopolitical situations between India and China might increase the financial pressure on telecom operators. The government of India is planning to stop Chinese telecom gear makers from supplying network to BSNL and MTNL. Also, private telecom operators might have to terminate their contract with Chinese vendors. However, telco giants Vodafone Idea and Bharti Airtel who are already under financial distress due to AGR dues might have to incur massive payouts if the telecom gear deals with Chinese vendors will be terminated.