The telecom industry in India witnessed an overall tariff hike. Indian mobile service operators resorted to 20%-25% tariff hikes for all the prepaid plans offered by them. Now it is expected that telcos might opt for another price hike in the foreseeable future with the introduction of 5G services in the country which is the world’s second-largest market. Even though the initiation of 5G services will ensure the generation of additional revenue for the telcos particularly from the enterprise and digital services segment, it is going to come at a high cost. The major cost is going to be the amount companies will pay for the airwaves at the 5G auction.
Some important aspects
- Bharti Airtel, Reliance Jio and Vodafone Idea — hiked their prepaid tariffs by 20% to 25%, raising fear of higher prices and inflation. Among them Airtel was the first one to hike, followed by the other two telecom giants, Vodafone Idea and Reliance Jio
- While announcing the hikes, these telecom operators cited that the new plans would improve their average revenue per users (ARPU) and help them deal with the financial stress faced by the industry
- The decision will enable the telecom industry to invest in rolling out 5G mobile services
Implications of the tariff
- This will increase the average revenue per user (ARPU), ensuring better profitability for all service providers
- Deferred payment on adjusted gross revenue (AGR) and no spectrum charges coupled with improved ARPU, will lead to better margins and profitability for service providers
This step will definitely be beneficial for the country and it’s a step undertaken by the government to make 5G available across India. The telcos have already been asking for the affordable pricing of the spectrum.
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