Telcos may hike tariff in next few months: Crisil

NEW DELHI:  Telecom operators in India may resort to another round of tariff hike in the second half of the current fiscal, according to a report by Crisil’s research wing. The report also said that, all three private telcos - Reliance Jio, Bharti Airtel and Vodafone Idea will close their FY23 with revenue growth of 20-25%. 

“Since players are expected to spend incrementally on the network and regulatory Capex in fiscal 2023, ARPU growth and tariff hikes could ease some pressure on their books. As a result, the revenue of the top three players is expected to grow a robust 20-25% this fiscal. Earnings before interest, tax, depreciation, and amortisation) is seen expanding 180-220 bps for the year,” reads the report.

The report also suggested that growth in average revenue per user (ARPU) is essential for realising a healthy bottom line and sustaining profitable growth. All these years, lower ARPU limits telcos’ capacity to invest in network and spectrum, resulting in poor service offerings. In fiscal 2021, the companies hiked tariffs, which rose their ARPU from 11% to Rs 149.

In fiscal 2022, ARPU growth slowed to 5%, driven by customer upgradations to 4G and the partial impact of tariff hikes taken in November 2021. Therefore, in fiscal 2023, Crisil expects ARPU should grow 15-20% due to the full-year impact of tariff hikes in fiscal 2022 and fiscal 2023 (anticipated in the second half).

 Last year, the three top telcos saw a 3% rise in a number of active users by adding 2.90 crore subscribers to the tally. Reliance Jio saw its total subscriber base fall sharply between August 2021 and February 2022.