Zero Interconnect Usage Charges Affecting ARPU Of Telcos: Here's Why

The removal of interconnect usage charges has affected the ARPU of telecom operators despite posting profits in the last quarter. Besides, both Reliance Jio and Airtel have managed to increase their subscriber base during the same period. Notably, interconnect charges have been removed by the telecom regulator TRAI this year in January.

According to TRAI data, the wireless subscriber grew by 8.3 million in February this year, which is the highest in the last year. Surprisingly, Vodafone-Idea, which is losing customers every quarter has also managed to add new customers in February.

Telecom Operators Added New Customers

The data pointed out that Reliance Jio added 4.3 million new customers, whereas Airtel 3.7 million users and Vodafone-Idea added only 0.70 million customers in the same month.

"The sliding voice tariffs, growing data tariffs, increasing data usage per subscriber, increasing data subscribers in the overall subscriber base, and reducing tariff differentials among the telcos, over the last one year, indicate that the industry is moving towards a higher average revenue per user (ARPU) regime," India Ratings and Research said.

However, the research firm said that ARPU has declined as interconnect usage charges become zero in January this year. Earlier, it was 6 paise per minute. The firm highlighted that Airtel ARPU declined to Rs. 145 from Rs. 166, while to Rs. 138 from Rs. 151. In addition, the firm states that telcos should monitor their ARPU in the coming quarters.

Broadband Penetration Might Increase

The report added that broadband users in India have been increased to 64 percent in February from 63 percent in January 2021. Besides, the data consumption per user has been increased. Furthermore, the firm said that the Department of Telecommunication is likely to cut the pricing of the 5G spectrum.

It is worth noting that several countries have already launched 5G services. On the other hand, the Indian Government is still planning to cut the base prices of airwaves so that telcos can purchase spectrum easily.

Apart from that, the DoT is considering adding some affordable bands, which means trials might delay in the country, which is why it is expected that Indians have to wait until the end of the next year to start using the upcoming technology. In addition, we believe that telcos might start focussing on the enterprise segment to increase the overall revenue.