According to a report by Crisil, Airtel, Reliance Jio and Vodafone Idea, users may have to pay more for the same services as the telecom operators aim to increase their revenues by 20-25 percent for FY23.
Life may become difficult for Airtel, Reliance Jio and Vodafone Idea users in India as they may soon be forced to spend more money. According to a report, the country’s three largest private telecom operators could raise rates again in the second half of FY23 (current fiscal year) to deliver 20-25 percent revenue growth. The report suggests that an increase in average revenue per user is considered critical for telecom operators to maintain their profitability, or could lead to a decline in the services they offer. It is also believed that the price increase may also be related to the upcoming 5G spectrum. Either way, if this happens, it will likely put additional strain on consumers at a time when rising fuel prices are 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 deliver an impressive 20-25 percent of revenue growth for these telecom service providers, boosting their profit margins by 1.80-2.20 percent in FY23 itself. It is worth noting that Airtel, Reliance Jio and Vodafone Idea have been consistently increasing rates since December 2019, after a period of fierce competition.
Airtel, Reliance Jio and Vodafone Idea may soon increase rates
The report also highlighted that the telecom companies will increase their average revenue per user (ARPU) by 15-20 percent in the fiscal year. This is due to the cumulative effect of last year’s increased tariffs, with companies raising prices by about 5 percent, and the new tariffs to be introduced soon. It is worth noting that according to the findings of the report, the price increase by Airtel, Reliance Jio and Vodafone Idea could happen as early as the end of June.
This higher ARPU is likely to ease the burden on telecom operators and they will likely invest in improving the network and regulatory capex (capital expenditure) in FY23. Moreover, with the 5G spectrum auction just around the corner, the telecom service providers will likely look for a revenue boost to conquer lucrative circles.
The total number of mobile subscribers in India has fallen in the past fiscal year. This happened when mobile operators removed inactive users to bring more transparency around the numbers, the report said. However, the number of active subscribers for the three private telcos increased by 3 percent as they combined to add 2.90 crore of new active subscribers to the list.