Home > Finance > Telecom sector news: Telcos tweak plans to push up ARPUs as near-term headline rate increase tough

Telecom sector news: Telcos tweak plans to push up ARPUs as near-term headline rate increase tough


India’s top telcos Reliance Jio Infocomm (Jio), Bharti and (Vi) are resorting to tweaking their tariff plans with lower data limits at higher prices but with additional validity in a bid to push average revenue per user (ARPU), given that a blanket price hike during the pandemic and amid stiff competition is difficult.

“We have indicated previously that an outright across-the-board price increase may not be easy and operators will have to widen the variety of pricing plans to effectively raise ARPU from heavy data users,” brokerage UBS said in a recent report.

Last week, telecom market leader Jio came up with a slew of offers starting from Rs 127 to Rs 2,397 for a validity of 15 days-365-day period. One of them had a 30-day offer too which gave less data than a similar 28-day one but longer validity.

Within a few days, Airtel, India’s second largest telco, came out with its own 60-day plan priced at Rs 456. Its benefits were similar to Jio’s newly launched Rs 447 prepaid pack with analysts saying this could be the start of a new set of tariffs.

The third telco, Vi, has not made any changes in its plans yet but is expected to do so since its senior management has reiterated the need to up the tariffs, say experts.

“With a combination of higher prices and lower data allowances, these new plans appear to be an attempt to increase tariffs,” UBS added in its report.

A senior telecom executive said these changes are targeted at subscribers with high data consumption during weekends. “Immediate impact on ARPU won’t be there since older tariffs exist. But if there is enough traction and customers prefer more validity at a higher price, then we can see an ARPU uptick of 5-10% over the next 2 quarters”.

Another industry executive said that both Airtel and Jio were “testing waters” given the Covid-19 impact on consumers’ wallets. These tweaks will continue to happen since the present ARPU is too low and unsustainable.

At the end of the fiscal fourth quarter through March, Jio and Airtel clocked ARPUs of Rs 138.2 and Rs 145, respectively. Vi is yet to announce its results and as of third quarter, had an ARPU of Rs 121.

The new 30-day validity structure also coincides with the sector regulator having floated a consultation paper seeking views on whether to intervene in determining the validity period of tariff plans. But the three telcos have urged the regulator not to intervene in fixing tariff validity spans and keep the matter under forbearance, saying any move to intervene would be unwarranted and could disrupt and destabilise mobile tariff structures.

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