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Saturday, May 25, 2024

What Size Can We Expect the Next Tariff Increase to Be?

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In Short:

Indian telecom operators, such as Bharti Airtel, are eagerly waiting for the Lok Sabha elections to end so they can increase tariffs by 15-17%. Airtel believes current telecom sector returns are low compared to high investments. Vi and Jio also need tariff hikes to boost their slow-growing ARPU. 5G services may soon come at an extra cost for consumers.


Telecom Operators in India to Increase Tariffs Post Lok Sabha Elections

how big will the next tariff hike

Telecom operators in India have been eagerly awaiting the conclusion of the central elections or the Lok Sabha elections in order to implement tariff hikes. The last tariff hike in the Indian telecom sector saw an increase of approximately 20-25% in the pricing of almost every plan.

This time around, analysts predict that telcos will increase tariffs by 15-17% post the elections, expected to end around June 1, 2024. Leading the way in tariff hikes is expected to be Bharti Airtel. Airtel has been gradually raising baseline tariffs and has indicated its intention to further increase tariffs.

Airtel believes that the telecom sector in India is not reaping healthy benefits due to the high investment and low returns. With the upcoming tariff hike, Airtel aims to surpass an Average Revenue Per User (ARPU) figure of Rs 250 before the end of FY25.

While none of the telcos have started monetizing 5G services yet, consumers may soon have to pay extra for 5G network services. Currently, 5G services are free for both prepaid and postpaid consumers.

Vodafone Idea (Vi) also requires a tariff hike as its ARPU is increasing at a slow pace. This is also the case for Reliance Jio, where ARPU growth has remained stagnant for several consecutive quarters. Without a tariff hike, these telcos might struggle to boost ARPU significantly compared to Airtel, as they have a larger base of lower-paying customers.


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