There's no denying the fact that a hike in fuel prices, especially diesel which is a key transportation fuel, affects the prices of groceries making commodities of daily use expensive for the masses. But there's another way that a surge in fuel prices is likely to have an impact on your pocket.
Zooming fuel prices can increase your mobile phone bill. How? well, the telecom sector is hugely dependent on diesel for running its power generators which keep their cell towers working almost 24x7. According to a report in The Economic Times, these generators are responsible for almost 99.99 per cent of the uptime of the mobile towers. As diesel prices have seen a seven per cent increase in prices since August 1, the ET report says that this hike over the last one month is likely to cause a decline of 50-60 basis points in the operating margins of the telecom companies. This impact on the profits of the tower industry may be passed on to the telecom companies who may not be able to bear the increased burden for too long and may pass it off to the end users, that is the common man.
According to the ET report, diesel cost forms seven to eight per cent of the total revenue of a telecom company and a continuous hike in its price is likely to have an impact on the company's Ebitda margins in the July-September period. Telecom industry is the second largest buyer of diesel after the Railways and spends nearly Rs 90 billion on it on an annual basis.
The dip in margins is another hit for the telecom industry which is reeling under the pressure of nearly Rs 8 trillion of debt, ET reports, caused by a price war started with the entry of Reliance Jio into the sector.