Airtel eyes tariff hike mid-year; here's how telcos' Arpu stack up

Airtel is likely to hike its tariffs across plans in the middle of the year. “We don’t need more Vodafone-type scenarios in the country… it’s very important that we have robust viable companies which can invest in new technologies, go to rural areas, provide fantastic coverage and capacity,” Bharti Enterprises Chairman Sunil Mittal said at the Mobile World Congress in Barcelona. “It (tariff hike) will happen across the board,” he said.

Earlier in February, Bharti Airtel’s CEO Gopal Vittal said average revenue per user (ARPU) needs to rise to Rs 300-level for a respectable return on capital and hoped that it will happen in due course. Telecom companies had hiked tariffs across all slabs in 2019 and 2021.

AIRTEL, VI ARPU HIT THE LOWEST IN Q2, FY19

Airtel reported an ARPU of Rs 193 in Q3, FY23 with the widening of its 4G customer base. The company reported ARPUs above Rs 190 six years ago. In the third quarter of FY15 reported ARPU was Rs 202. Airtel’s ARPU started declining and bottomed out in the second quarter of FY19. Similarly, Vodafone Idea’s ARPU, too, hit its lowest in the same quarter and has regained lost ground since then.

WHAT CAUSED ARPU DECLINE 

Reliance Jio disrupted the telecom sector with innovations and pricing after its launch in September 2016. For the first six months, it offered data and voice calls free. The gradual reduction and eventual scrapping of interconnect usage charges (charges made by one operator to another for voice calls) from January 2021 has also impacted ARPU of telecom companies.