In the upcoming days, all the telecom operators in the industry are going to raise tariffs. The first move was made by Vodafone Idea, which announced a hike in tariffs starting December 1. Next up, Bharti Airtel, Reliance Jio and BSNL have also announced that they would be increasing the prices of their plans in the coming weeks. But, now the next question in the minds of the consumers is exactly how much will the prices of these tariffs go up. Now, although we will get to see how much the prices increase in the coming days, as per an ET Telecom report on the matter and according to the analysts, Bharti Airtel and Vodafone Idea have a room for increasing tariffs by 30% over the next three months. For a telecom sector which has now been distressed for long, this marks a turn towards recovery as the telecom companies will finally have a chance of increasing their earnings and lifting the ARPU.
Industry Back On the Path of Recovery
It is worth noting that by introducing a 6 paise per minute charge on outgoing calls to other networks, Reliance Jio has already made a hike of 15% over its plans, which leaves it less headroom for hiking its prices further. Not only this, but over the period of time, the gap between the pricing of Reliance Jio, which has been the most competitive in the industry, and that of other telecom operators has narrowed down. On the other hand, since Bharti Airtel and Vodafone Idea have not made any introduction of IUC plans or any hike in the past months, they have a little buffer to increase tariffs, by almost as much as 30%.
Telcos Looking for Consultation Paper by Trai
Reliance Jio has said that it would hike the tariff as per the regulatory on the matter and that it would do so in such a way that it would not harm the data growth, and the consumers. Jeffries said, “the key thing to watch is Trai’s consultation paper on pricing which Jio discussed.” As per the firm, the material difference in the industry would come only when the tariff hike is made in the quantum of 20% or more paired with relief measures from the government. It is worth noting that the government has also been making efforts to repair the telecom industry and ease the financial tension in the sector.
Govt Relief to Play a Major Role
As per Credit Suisse, in the coming two years, by FY22, the ARPU of Bharti Airtel and Vodafone Idea might rise by 55% and could reach Rs 198 and Rs 166 respectively. Currently, in the quarter ending September, both had reported ARPU of Rs 128 and Rs 107. As per the US brokerage firm, this is a big announcement and a hugely positive one, and according to Morgan Stanley, it signals a faster than expected repair situation in the industry.
If relief from the government comes in any way, whether in the form of payment moratorium, or extended payment deadlines, then the telcos will have a sign of relief for paying off their dues on the AGR which have amounted to Rs 1.3 lakh crore. Combined with the new tariff raise by the telecom operators, the balance sheets of these companies will finally be breathed back to life as they have been bruised for long and had received a big blow recently with the AGR decision in the Supreme Court.