Tariff Hikes: How important are they getting for Telecom companies

Now that we are in 2023, 5G is the most highlighted thing in the telecom industry. However, with the influx of 5G services, there is also fe...

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Now that we are in 2023, 5G is the most highlighted thing in the telecom industry. However, with the influx of 5G services, there is also fear in the market around the hike in prepaid tariffs. According to a report, all three major service providers - Jio, Airtel, and Vi (Vodafone Idea) are set to hike the tariffs on their prepaid plans. 

In a report from Telecom Talk, telecom leader Reliance Jio hasn't seen a significant rise in its quarterly profits. The report shows that for Q1 FY23, Jio's net profit was ₹4,530 crore, and in the following quarter (Q2 FY23), the telco reported a net profit of ₹4,729 crore. In Q1, Jio's average revenue per user stood at ₹175.7 crore in Q1 and it rose to ₹177.2 crores in the next quarter.

On the other hand, Airtel had a little higher ARPU in Q2 than Jio, reporting a ₹190 ARPU in Q2. Airtel reported a net profit of ₹2,145 crore in the quarter. Even an ARPU of ₹200 won’t be enough to return the investment. Airtel had started testing entry-level tariff correction in Haryana and Odisha and ICICI securities were okay with this.

Industry experts have suggested that the solution to increasing the net profit and ARPU could be a hike of prepaid tariff plans. That is the only option they have for now. So we might see the tariff hike very soon. It's been more than a year since the telcos hiked the prices of tariffs. 

Both telecoms, Airtel and Jio are spending a vast amount of money on implementing 5G services in India but they are not seeing profits from the current situation. So in order to make money and provide the return service to the investors they need to hike the tariff plans. 

Talking about VI, it also said to raise the tariffs but instead, they reduced the postpaid and prepaid plans. No doubt VI offers the cheapest plans but it is way behind in the game than Airtel and Jio. VI’s network is not responding decently as well.

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