The telecom industry has taken a welcome step to raise tariffs, responding to the recent government package aimed at reviving the financially stressed sector. A comprehensive tariff hike in the range of 20 to 25 per cent in the telcos’ bread and butter prepaid category is expected to push up the average revenue per user (ARPU)—a key business metric— to nearly Rs 200 a month by early next year. A significant price hike after almost two years should offer room to the industry to invest more in infrastructure and quality of service, which has slipped drastically in a highly disruptive market focused on discounts. Also, it’s a move that’s likely to prevent a duopoly structure in the telecom sector.
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