Over the last few quarters, telecom operators saw a slight increase in Average Revenue per User (ARPU). As the country went into lockdown to combat COVID-19, the ARPU of telecom operators, especially Bharti Airtel, has been on the rise because of the high utilisation of telecom services by the customers. S.P. Kochhar, the Director General at Cellular Operators Association of India (COAI), opined that the recent ARPU growth is ‘not adequate’ and it requires to grow further at a faster rate. He also mentioned if the ARPU grows at the current pace, the telecom industry will take several years to reach the minimum acceptable level of ARPU.
ARPU Should Grow at a Higher Rate: COAI
Kochhar mentioned that the ARPU of telecom operators is required to grow much more with a higher growth rate to break even. As we already know, Bharti Airtel is aiming at Rs 300 ARPU in the coming quarters, and Jio is also showing decent ARPU increase with every passing quarter. The COAI DG also mentioned that the ARPU is on the rise thanks to high utilisation of telecom services during the lockdown.
“ARPUs have gone up, but they have gone up marginally. This marginal growth is not sufficient to bring them at a break-even level and if they grow the way they are rising, it will take many many years before they can come to a minimum acceptable level,” Kochhar said, as reported by IANS.
In the next couple of quarters, the ARPU of Bharti Airtel will likely rise to Rs 200, whereas the same for Jio would be around Rs 170. But again, that depends on when the next tariff hike takes place.
COAI Director General Also Urges for Spectrum Price Reduction
Furthermore, he reiterated that the spectrum charges and license fee should be reduced to see takers. “Spectrum charges, licence fee needs to be reduced. What are we going to do with the spectrum if there are no takers…,” he said speaking to IANS.
The Director General also reiterated the financial health of the sector is ‘bad.’ If telcos really want to roll out 5G services to India, the financial health of the industry should improve first. “Without improving the financial health, it will be very difficult for the telcos to really invest so heavily into technologies,” he further added.
The Union Cabinet recently approved the next spectrum auction plan by DoT and it might take place by March 2021.
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