- Telecom operators are expected to announce a major
tariff hike after the general elections. Bharti Airtel will reportedly lead the tariff hike which will increase the prices by up to 17%.- The last major tariff hike in the telecom industry increased the prices by around 20% in December 2021.
Indian
A report by Moneycontrol, citing analysts, has said that Sunil Mittal-led Bharti Airtel will lead the upcoming round of tariff hike. The last major tariff hike was announced in December 2021 and Airtel had increased the prices by around 20% back then.
The general elections are scheduled to commence on April 19 and the last phase will end on June 1. The result of the election will be declared on June 4.
According to analysts at Antique Stock Broking, Airtel will emerge as the biggest beneficiary of the tariff hike as it will be able to increase its average revenue per user (
Additionally, the telco’s subscriber base is expected to grow at 2% per annum, higher than the industry’s growth of 1%.
Prices in India are among the cheapest in the world
As per analysts, the prices of telecom services are among the cheapest in the world and need revision to stabilise revenues. The ARPU may need to be increased from around ₹200 to ₹300 to ensure profitability for large telecom players like Bharti Airtel.
The company’s plan to increase its ARPU to ₹286 includes the tariff hike contributing around ₹55, customers moving from 2G to 4G contributing ₹10 and customers opting for costlier 4G and 5G plans contributing ₹14. This also hints towards the company introducing new 5G plans. At present, there are no separate 5G plans and 4G users are being offered complimentary 5G services by both Reliance Jio and Airtel.
While challenges do exist as Bharti has chosen a different 5G rollout path versus key competitors, we believe it is unlikely to dent Bharti’s subscriber base or growth significantly. We also believe valuations do not reflect the emerging highly positive macro telecom sector environment, opines the analysts.
Airtel and Jio have been gaining subscribers over the past few years at the cost of cash-strapped Vi and state-run Bharat Sanchar Nigam Limited (BSNL). The two telcos, who are yet to launch 5G services in the country, are expected to continue losing subscribers over the current financial year as well.
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