Telecom Operators Can Increase ARPU Without Tariff Hike: Here's How

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Telecom operators are increasing tariffs to increase their overall revenue. However, India Ratings and Research (Ind-Ra) believes that the telecom operator can increase their ARPU without tariff hikes as data usage penetration has increased from the last two to three years.

 
Telecom Operators Can Increase ARPU Without Tariff Hike: Here's How

"The sliding voice tariffs, growing data tariffs, increasing data usage per subscriber, and increasing data subscribers in the overall subscriber base over the last one year indicate that the average revenue per user of the industry could grow even without tariffs hikes," India Ratings and Research said.

In addition, the firm said that the subscriber base of the industry has been increasing from 4 million on a month-on-month basis in June this year. Besides, the broadband user base has been increased by 11.7 million. However, the report pointed out that the visitor location register has been declined by 1.3 million.

"In June 2021, the number of broadband subscribers increased by strong 11.7 million, the broadband penetration as a percentage of overall subscriber base continued," the firm added.

Duopoly Is Still Possible In Telecom Industry

Despite the fact that the Department of Telecommunication has introduced a relief package for telecom operators, analysts believe that the industry can move towards a duopoly if they do not increase tariffs.

The relief package introduced by the government includes removing non-telecom items from the AGR definition, a four-year moratorium for telecom operators so that they can clear their dues. However, analysts believe that all measures announced by the ministry are a welcome step and will improve the condition of the overall industry.

Change Of AGR Definition: Check Details Here

Meanwhile, Axis Securities asserted that the removing penalty on spectrum dues is a much-needed change. Additionally, changing the definition of AGR and elimination of non-telecom items is also good a move by the Government of India.

 

"This extra burden has hurt the telecom industry in the past but the new reform will now pave the way for telecom players to make higher capital investments," Axis Securities said in its note. But still, we believe that Airtel and Reliance Jio will be in a better position than the Vodafone-Idea.

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