Mobile recharge packs to get more expensive as telcos gear up for another round of tariff hikes: Report

Mobile phone users might have to spend notably more for their recharge packs after the general election, as reports indicate that telecom firms are gearing up for a fourth round of tariff hikes in recent times.

According to a report by brokerage Axis Capital, a meaningful hike of approximately 25% by operators is anticipated soon. This surge is attributed to a stable competitive environment, the necessity to bolster profitability post heavy 5G investments, and ongoing government support.

Despite the apparent magnitude of the increase, the report suggests it should be manageable for both urban and rural users. Urban households may witness a rise in telecom expenditure from 3.2% to 3.6% of total expenditure, while for rural subscribers, spending could escalate from 5.2% to 5.9%.

Analysts predict that the consumers are likely to remain loyal and pay up, especially if they continue to enjoy high-speed connectivity — a vital need of these modern times.

For telecom operators, the projected roughly 25% hike in headline rates is expected to correspond to a 16% growth in the average revenue per user (ARPU), as estimated by Axis Capital.

While Jio reported an ARPU of Rs 181.7 for the quarter ending March, Bharti Airtel and Vodafone Idea (Vi) are yet to disclose their March quarter numbers. However, their figures stood at Rs 208 and Rs 145 respectively for the October-December 2023 period.

Peeyush Vaish, TMT industry leader at Deloitte, South Asia, anticipates a 10-15% increase in ARPUs, adding approximately Rs 100 per subscriber by the end of this calendar year. This hike is expected to be driven by price increases for 4G/5G bundled packs and the phasing out of low-value packs.

Analysts foresee Bharti Airtel and Jio emerging as the primary beneficiaries of the wireless pack price hike. While Vi is also expected to boost its ARPU by fortifying its network and minimising subscriber churn, the overall revenue impact may still be limited compared to its competitors.

At the end of Q4 FY24, Jio’s total assets stood at Rs 4,87,405 crore, while its net profit from January to March climbed to Rs 5,337 crore from Rs 4,716 crore a year ago. On the other hand, Bharti Airtel’s consolidated Q4 revenue came in at Rs 37,599 crore, with its net profit of Rs 2,072 crore dropping 31.1% compared to a year ago.

(With inputs from The Economic Times)