Telecom Industry to Witness Potential Price Hike of 15-20% in Coming Months: Motilal Oswal

Research firm CLSA predicts that the delay in floor pricing rollout by Trai could force Vodafone Idea to increase the tariff prices

By December 14th, 2020 AT 11:19 AM

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Analysts are predicting telcos in India will raise tariff prices very soon. Motilal Oswal Financial Services, in its new report, said the Indian telecom industry would witness a price hike of 15-20% due to “weakening subscribers growth.” The report first published by ET Telecom also highlights that struggling telco Vodafone Idea will raise the tariff prices first, followed by other operators. Vodafone Idea already raised the prices of its entry-level family postpaid plans in the UP East circle, and the same could be implemented in other circles as well. Vi is currently on a tariff plan launch spree as the telco introduced a couple of new Family postpaid and the Rs 65 prepaid plan.

Tariff Hike in India: What to Expect?

“A price hike, which looked uncertain in the last 6-9 months due to the challenging economic scenario, has started to look imminent with weakening subscriber growth across players. Our recent interactions with industry experts indicate a potential price hike of 15-20% in the next two months,” Motilal Oswal Financial Services said in a report, as reported by ET Telecom.

As we already know, the Trai is all set to launch introduce floor pricing in the industry. However, there’s no proper timeline provided by the sector regular for the rollout of floor pricing. Another research firm CLSA predicts that the delay in floor pricing rollout by Trai could force Vodafone Idea to increase the tariff prices.

Bharti Airtel did not hike the postpaid tariffs as Vodafone Idea did recently. This is because the former is in a better position compared to the latter. Trai said Airtel added more subscribers than Jio in September 2020, something which wasn’t expected.

“With an intensifying market-share battle, sector floor tariffs will be preferred, in our view. And even if Bharti Airtel does not lead in tariff hikes, it had the best flowthrough of Dec-19 increases and its ARPU is at a 12-24% premium to peers,” CLSA added.

We haven’t seen any signs of Vodafone Idea prepaid tariff hike as of this writing. Analysts earlier predicted that Vi would raise tariffs in early December, but that didn’t happen. A late-December hike is also on the cards. Vodafone Idea now has less than 300 million customers, whereas Bharti Airtel is closing in with Reliance Jio in terms of Active User Base.

Chakri is a go-to guy for your next smartphone recommendation. Back in his engineering days, he used to play with smartphones by installing custom ROMs and that passion got him into the tech industry. He still goes nuts about a smartphone knocking his door for review. Currently managing everything at Telecom Talk, Chakri is trying to master PUBG Mobile in his free time.

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