Mobile phone bills for subscribers in India may go up by 15% to 25% on their existing plans as telcos eye a revenue raise through tariff revision. With the increase in revenue, mobile operators seek to expand 5G stations and enhance network load capacity to cater to the increase in consumption and creation of video content. Industry experts believe that it would help telcos increase their average revenue per user (ARPU) by about 10% to 15%.
In Q3 2024, Bharati Airtel registered average revenue of ₹208 per user, whereas Reliance Jio received just over ₹181, while Vodafone Idea (VI) lagged at ₹145.
Bharati Airtel’s MD, Gopal Vittal, during the company’s Q3 investor call said, “The real improvement will come only if there is a tariff repair. As I have mentioned before it is not a question of if tariff repair will happen, it is a question of when it will happen,” PTI reported.
In the short-term, Airtel is looking for an ARPU of ₹250. Vittal also said that free data on 5G is a headwind on any monetisation.
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Alarmingly, a hike in tariff plans could lead to an increase of 12% to 15% in household telecom expenditures every month, pointed out industry experts
The last tariff revision by all the telecom players including Airtel, Jio, and VI, happened in December 2021. During that revision, the base plan of ₹99 was increased to ₹155 for Airtel while every other telco followed the same path of tariff restructuring.
“Another round of tariff hikes might be around the corner. The expected broad-based tariff-increase of 15%-25% complimented with higher data consumption and upgrade of users to bundled packages/data plans could increase ARPUs in the range of 10-15% for the telcos,” said Aditya Khaitan, Partner, Consulting Deloitte India.
He claims that the increase in ARPU will improve the financial stability of the telecom sector.
However, Khaitan believes that the customers are likely to remain loyal to their service providers.
“The customers are increasingly demonstrating their willingness to pay for quality telecommunication services,” he observed.
It is important to note that more customers are now moving towards 5G instead of 4G. They are generating more video content and consuming it more than ever before. This has put a strain on telecom infrastructure. In order to scale, telcos are pushing for a tariff revision as it will help them generate more revenue for the new spectrum and technologies to meet the demands.
For example, even the cellular representative body in India, COAI (Cellular Operators Association of India) advocates for charging OTT platforms like WhatsApp as they are using and surviving on the network developed by telcos over the years without paying anything, currently.
Telecom players are looking to monetise 5G and also to have a cap on the unlimited data plans. This way, they could persuade subscribers to pay more for a 5G plan, compared to what they are paying currently under their 4G plan for 5G services.
“Telcos have been wanting to raise tariffs for a while now with the objective of increasing their average revenue per user. Their rationale is that most other developing countries charge not only higher in terms of absolute rates but also in terms of the percentage of the per capita GNI,” said Shreya Suri, Partner, IndusLaw, an Indian law firm.
Currently, a 1GB/per day prepaid plan that is valid for 28 days with unlimited voice calls and 100 SMS messages each day costs ₹209 on the Jio network. And, if we add just 20% of the estimated hike, it will add over ₹41 more to the same pack. Hence, the same prepaid plan might cost you ₹250. Similarly, a VI prepaid plan of ₹269 with the same benefits can cost ₹52 more if 20% restructuring is done.
Jio has already announced revisions to its tariff plans, including postpaid ones, starting July 3. Now, the same ₹209 pack will cost ₹249. It is expected that Airtel and VI will soon announce revised tariff plans for both prepaid and postpaid users.
To cope with any possible tariff hike, subscribers may either switch to postpaid or to cheaper plans from their respective service providers, noted Suri.
For prepaid users, telecom operators will offer ‘bundled services’ like a subscription to an OTT platform to hold their subscribers. With more 5G devices and video consumption, telcos are pointing to the silver lining to justify any possible future tariff hike.
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