Sunil Mittal’s Bharti Airtel is expected to raise its tariffs by 5-10% in the coming months in order to improve profit margins, as stated by the Fitch Rating report. The company is also looking forward to increasing its Average Revenue per User (ARPU) with the introduction of a new minimum recharge plan priced at INR 35, the report said. “We forecast Bharti’s Indian ARPU to rise by 5%-10% in FY20 as the incumbents focus on boosting profitability with the introduction of a minimum recharge plan of INR 35 per month,” said the report, adding that the company’s blended average tariff is also expected to rise during the financial year 2020.
While this new move of the company will help with ARPU, it will also result in EBITDA growth of the telecom major. The company’s telecom services are being used by about 10-15 cr rural subscribers, who do not pay at par with the industry average tariff. Also, India’s revenue generation via the telecom industry remains one of the lowest globally. This fact has put enormous pressure on the telecom industry as at INR 122 per month, the ARPU is not at the sustainable level for the industry.
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Meanwhile, Bharti Airtel is not the only telecom firm that is looking for better profits. According to the same report, Mukesh Ambani’s Reliance Jio is also looking for a tariff hike in order to reap the profits of the large investment that the company has done in infrastructure.
According to the report, the Indian consumer is capable of shelling out more for mobile services as evidenced by the monthly data consumption rate per user.
Bharti Airtel awaits another major financial crunch as it, along with Vodafone-Idea, may have to pay INR 92,000 cr in outstanding license fees, if it loses the on-going case in the Supreme Court. The apex court is soon going to deliver the verdict on a case that has been going on since 2006 which pertains to the definition of AGR (Adjusted Gross revenue).
Meanwhile, Bharti Airtel is not the only telecom firm that is looking for better profits. According to the same report, Mukesh Ambani’s Reliance Jio is also looking for a tariff hike in order to reap the profits of the large investment that the company has done in infrastructure.
India has witnessed a revolution in data consumption per month catalyzed by low data rates post Reliance Jio bringing disruption in the Indian telecom industry. Also, the same is also pushed by the penetration of affordable smartphones in Indian households. Even if the telecom companies choose to increase tariffs, the data demand is not likely to go down, according to the report.
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