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Is tariff revision coming to improve service quality?

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In Short:

The telecom industry in India is considering raising tariffs to improve its financial health and service quality. With the launch of 5G services, analysts estimate a potential increase of up to 25% in tariffs could help boost revenue per user. Reliance Jio and Bharti Airtel have invested heavily in building networks for 5G, while Vodafone Idea is also gearing up to launch its services post a successful fundraise. TRAI is also focusing on improving service quality by implementing stricter regulations and reporting rules. As the industry evolves with 5G technology, tariff hikes could help improve key metrics and service quality.

The telecom industry contemplates tariff revision to improve financials and service quality

The telecom industry is considering adjusting tariffs to boost financial performance and enhance service quality, which has been declining.

Current Scenario

India, as the fastest-growing mobile market globally, has recently introduced 5G services. However, industry analysts suggest that a tariff revision of up to 25% is essential to raise the average revenue per user (ARPU) which is presently low compared to global standards.

Key Players

Reliance Jio and Bharti Airtel have invested significantly in 5G infrastructure, while Vodafone Idea is gearing up to launch its services. The last tariff hike was in December 2021, and further adjustments are necessary.

Market Predictions

Experts anticipate a rise in mobile tariffs post-elections with a target to increase ARPU from Rs 200 to Rs 300. The industry’s return on capital employed (ROCE) stands at 9.5%, indicating the need for substantial tariff revisions.

Regulatory Focus

TRAI is emphasizing quality of service (QoS) improvements to address call drop issues. The regulator has introduced stricter reporting rules for base stations and mobile towers to enhance monitoring and enforcement.

Future Outlook

As 5G adoption grows and new use cases emerge, the industry expects returns on investments. Tariff adjustments will enable the sector to boost key metrics and service standards in line with evolving consumer demands.

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