Mobile Phone Bills Set To Increase In India By 25 Per Cent Post-Election: Report

Telecom companies in India are considering raising tariffs again, which could lead to higher bills for mobile phone users. Despite the phone tariff hike, the report indicates that the increase should be manageable for both urban and rural users, particularly with the consistent demand for data services.

As per a report by brokerage firm Axis Capital, mobile phone bills could rise to boost the average revenue per user (ARPU) for telecom operators in the country. The report further suggested that a hike of approximately 25 percent is around the corner. 

Despite the phone tariff hike, the report indicates that the increase should be manageable for both urban and rural users, particularly with the consistent demand for data services. In urban households, telecom spending is expected to increase from 3.2 percent to 3.6 percent of total expenditure, while for rural subscribers, it would rise from 5.2 percent to 5.9 percent.

Axis Capital estimates that the expected 25 percent increase in headline rates would correspond to a 16 percent growth in ARPU for telecom giants like Bharti Airtel (expected to reach Rs 29) and Reliance Jio (expected to reach Rs 26).

“We expect a meaningful hike of around 25% by the operators in the near term on the back of a stable competitive environment, their need to improve profitability following heavy 5G investment, and continued government support,” a report quoted the brokerage firm as saying in a statement.

Peeyush Vaish, TMT industry leader at Deloitte, South Asia, was quoted by news agency as saying that operators are strategising to monetize their 5G infrastructure investments by revising tariff structures of bundled packages. 

He anticipates a 10 percent to 15 percent increase in ARPUs, adding approximately Rs 100 per subscriber by the end of this year, partly due to price adjustments for 4G/5G bundled packs and the phasing out of low-value plans. Vaish elaborated that consumers are inclined to remain loyal to their providers as long as they receive high-speed connectivity, showing a readiness to pay for telecom services.

Analysts predict that Bharti Airtel and Reliance Jio will be the main beneficiaries of the wireless pack price hikes.