Telecom operators in India raise tariffs as they seek to stay viable

Indian telecom users have enjoyed some of the world’s cheapest tariffs in recent years, which has led to rapid adoption of the Internet in the world’s second-most-populous country.

- Debarshi Dasgupta

But this has been at the cost of telecom operators, which bled profusely in a hyper-competitive environment marked by ultra-low tariffs and considerable losses.

A course correction is now on as operators raise tariffs to remain in business and repay debts, including billions of rupees owed to the government for spectrum use.

The three key private operators – Reliance Jio Infocomm, Bharti Airtel and Vodafone Idea – have announced tariff hikes, including for entry-level pre-paid plans, by around 20 per cent to 25 per cent – all within the span of about a week beginning on Nov 22.

This is the second industry-wide hike since December 2019.

It signals a growing realisation that the current average revenue per user (ARPU) is unsustainable and that boosting operating incomes is necessary as telecoms firms seek to grow and invest in newer technologies.

“The price hike should be looked at as a business continuity measure because the firms have to run a sustainable business and offer quality services,” said Ms Charu Paliwal, an analyst with Counterpoint Research, a global industry analysis firm.

“This is exactly what the industry needs right now.”

She added: “Banks and investors are not going to invest if there are no returns in this business, which could ultimately decimate the ability of telecom operators to invest in newer technologies and grow.”