The news of tariff hike in the telecom industry has totally engulfed the sector, and everyone, including the companies and the subscribers are talking about it. However, there is also the talk about what will be the impact of the new tariff hike for the subscribers. In regards with this, the Cellular Operators Association of India (COAI) of India has said that the revenue which will be generated as a result of the tariff hike on these prepaid plans will be put back into improving customer service, network quality and new technologies. This new report comes from ET Telecom. It is worth noting that the Cellular Operators Association of India (COAI) represents the top telecom operators in India, including Bharti Airtel, Vodafone Idea and other gear manufacturers.
COAI Sends Letter to Telecom Secretary
As per the Director-General of COAI, Rajan Matthews, the customers have enjoyed very cheap tariffs for the last couple of years, but even with the new hike in the tariffs, the subscribers will be paying much less than what they were paying years ago. The COAI also sent a letter to telecom secretary Anshu Prakash, in which it said that the consumers will now be paying Rs 11 per GB of data which would be higher than the Rs 7.7 per GB price which they were paying until now. But, as compared to the extremely high cost of Rs 225 per GB in 2015 and Rs 333 per GB in 2010, it is very cheap. Also, not to forget that the data costs remain well below the global average of $8.5 per GB.
On the other hand, while the data costs have gone up a little, the ARPU has come down from Rs 141 in 2010 to Rs 118 in 2017 and further down to Rs 80. Regarding this COAI said, “We do not find the reported tariff increases to impact affordability negatively, as the majority of present customers were paying well in excess of this amount with substantially less consumption of voice minutes and data.”
Adding onto his statements, Rajan Matthews said that the industry would gain from the new revenue which would eventually translate to enhanced network for the subscribers, along with new technologies like Internet of Things (IoT) video streaming and more. As per Rajan Matthews, the more revenue for the telecom companies would mean that they would be able to hire more, and offer better services to the subscribers and thus get more capital from the creditors. This would also allow the operators to raise more money. As per Matthews, a 10% increase in broadband penetration would translate to 3-4% rise in the GDP.
Pressure on Telcos Because of AGR Issue
Matthews also remarked about the pressure from the Adjusted Gross Revenue (AGR) matter, which has put pressure of above Rs 1.3 lakh crore in the entire industry. This pressure is mostly to be borne by the two leading telecom operators in the country, which include Bharti Airtel and Vodafone Idea. These two telcos have to pay Rs 90,000 crore or more to the DoT in license fees and Spectrum dues after the new verdict from Supreme Court on October 24. After getting only a little relief from the government in the form of payment moratorium, the telecom operators have started to hike the tariffs of their prepaid plans as much as by 40%. Almost every telecom operator has hiked their tariffs in the past few days. While Vodafone Idea has launched its revamped portfolio today, Reliance Jio is all set to announce its increased plan pricing on December 6.