Bad News for Airtel, Jio and Vodafone users, Telcos are likely to hike tariffs again!

Life can get tough for Airtel, Reliance Jio and Vodafone Idea users in India as they could be forced to shell out more money soon. According to a report, the country’s top three private telecom operators can hike tariffs again in the second half of FY23 (current fiscal year) to target a revenue growth of 20-25 percent. The report suggests that a rise in average revenue per user is being considered critical for the telecom companies to maintain their profitability or it can result in decline of the services offered by them. It is also believed that the price hike can also be related to the upcoming 5G spectrum. Either way, if this happens, it will likely add an extra burden on consumers at a time when rising fuel prices is already burning a hole in their pockets.

This report comes from the domestic rating agency Crisil, which was released on May 31. The likely price hike will add an impressive 20-25 percent of revenue growth for these telecom service providers, which will expand their profit margins by 1.80-2.20 percent in the FY23 itself. It is worth noting that Airtel, Reliance Jio and Vodafone Idea have been consistently raising tariffs ever since December 2019, after a period of intense competition.

Airtel, Reliance Jio and Vodafone Idea can hike tariffs soon

The report also highlighted that the telecom companies will boost their average revenue per user (ARPU) by 15-20 percent in the fiscal year. This will be due to the cumulative effect of last year’s increased tariffs, where companies increased the prices by roughly 5 percent, and the new tariffs that will be introduced soon. It is worth noting that as per the findings of the report, the price hike by Airtel, Reliance Jio and Vodafone Idea can come as early as the end of June.

This increased ARPU is likely to lift some burden for the telecom operators as well as they are likely to invest in improving network and regulatory Capex (capital expenditure) in FY23. Additionally, with the 5G spectrum auction just around the corner, the telecom service providers are likely to look for a revenue boost to capture lucrative circles.

The overall number of mobile subscribers in India took a dip in the previous fiscal year. This happened as mobile operators removed inactive users to bring better transparency around the numbers, the report noted. However, the number of active subscribers for the three private telecom companies increased by 3 percent as they collectively added 2.90 crore new active subscribers to the list.