Telcos have entered the mega capex cycle with the launch of 5G services. Thus, the discussion regarding the next stage of price increases for 4G plans is once again making the rounds. However, according to Financial Express, analysts said the rate hike will be lower than in 2021, largely due to inflationary pressures. According to Nitin Soni, senior director at Fitch Ratings, the next stage of rate hikes is expected in the next 6 to 12 months. He added that a delay in rate hikes by telecom companies is expected largely due to weak consumer sentiment on inflationary pressures.
After 2 years, telecommunications companies in November of the previous year increased the prices of certain prepaid plans by 20-25%. While analysts have given mixed views on the timing of rate hikes this time around, they expect them to be in the 10-20% range. Tariff increases are crucial for telecommunications companies in order to increase their average revenue per user (Arpu), which is a key parameter of profitability for them.
The rating agency has a stable outlook on India’s telecom sector and expects revenue and profit growth on the back of higher Arpu, potential for 5G enterprise business and low overheads. use of the spectrum.
Currently, India has one of the lowest mobile tariffs in the world. This development is due to the fact that Reliance Jio had shaken up the telecommunications market with its entry in 2016 by providing free data and unlimited calls.
Lately, companies like Bharti Airtel and Vodafone Idea have been pushing for tariff hikes to improve revenue and meet rising operating costs. Bharti Airtel has repeatedly stated that it will not hesitate to take the initiative to raise fares. In previous hikes, it was noted that Bharti Airtel raised tariffs first, and in reaction to the market, peers Reliance Jio and Vodafone Idea follow.
Telecom operators had increased the prices of postpaid plans in July last year. On the 5G tariff plans, the companies would continue to provide the services on the current 4G plans for some time now according to analysts.
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