In this news, we discuss the Airtel, Jio and others likely to demand price increase for phone plans.
Telecommunications companies like Airtel, Jio and others are likely heading for a possible price hike. Credit rating agency ICRA has said tariff hikes are on the agenda as telecom operators in India are required to make large payments to the government. According to the ICRA, a sustained and significant expansion of the average revenue per user (ARPU) is essential from the perspective of telecommunications operators to meet their payment obligations.
The Supreme Court has granted 10 years to certain telecommunications operators to erase their AGR contributions. Telecommunications operators are also required to pay auction installments and a regular share of revenue to the government. It is not clear, however, whether the next round of tariff increases will be applied to telecom operators who face AGR dues or whether it will be applied by all operators.
“While the industry is still grappling with high debt levels and weak debt coverage measures, the past year has seen some breathing space in terms of steady improvement in ARPU, mainly driven by increases tariffs implemented in December 2019, debt reduction measures taken by telecommunications operators and moderation. the intensity of investments, ”said Anupama Arora, vice president and sector head of corporate ratings at ICRA, in a statement.
ICRA further noted that the postpaid segment has emerged as the battlefront with reference to Jio bringing its new postpaid Plus plans to the market and Airtel expanding its base plan Rs 399. The company noted that postpaid plans bring a boost. greater adhesion to users as well as a higher ARPU.
“It remains to be seen how this will impact on competition, as India is generally a prepaid market while internationally many countries are dominated by the postpaid connection,” noted ICRA. According to the firm, rate hikes and consistent upgrades of 2G subscribers to 4G have improved ARPUs in the past.
It is not clear, however, whether the next round of tariff increases will be applied to telecom operators who face AGR dues or whether it will be applied by all operators.
- According to the ICRA, a credit rating agency, tariff increases are expected as telecom operators in India are required to make large payments to the government.
- Telecom operators are required to make large payments to the government in the form of AGR dues, auction payments, and regular revenue sharing.
- ICRA noted that rate increases and consistent upgrades of 2G subscribers to 4G have improved ARPUs in the past.