Telecom ARPU Might Increase To Rs. 220 In Medium Term: ICRA

The telecom companies are all set to increase the tariff prices as operators want to achieve Rs. 220 average revenue per user in the medium-term as per the new ICRA report. The report said that all companies want to pay statutory dues, spectrum buys, and auction instalments.

"With this, the industry revenues are expected to improve by 12-15 percent per annum for FY2021 and FY2023, while OPBDITA (operating profit before depreciation, interest, tax, and amortization) is expected to expand by 22-25 percent per annum given the high operating leverage," ICRA vice president of corporate ratings Anupama Arora said.

However, the research firm pointed out that it is not clear that the tariff hike will across all the sectors or it will be limited to a few telecom players. Additionally, the firm said that all telecom players are focussing on the postpaid segment, ever since Reliance Jio launched five plans.

These four postpaid plans are available at Rs. 399, Rs. 599, Rs. 799, Rs. 999, and Rs. 1,499. These plans are also offering content from Netflix, Amazon Prime, and many more applications, however, it needs to see that these plans will match the competition, said ICRA.

"Notwithstanding the competitive intensity, the telcos have been able to improve the ARPUs given the tariff hikes implemented in the past and consistent upgrades of 2G subscribers to 4G. This has resulted in an improvement in the industry revenues and AGR in Q1FY2021," said Arora.

Furthermore, the report highlighted that the telecom industry has witnessed a decline of Rs. 4.4 lakh crore FY 2020. Besides, the research firm said that the Supreme Court order on the AGR dues will add the pressure to Rs. 4.9 lakh crore by the end of this financial year and it will increase to Rs. 4.65 lakh crore by March 31, 2022.