Telecom consumers should brace themselves for a potential tariff hike in the aftermath of the general elections, as mobile operators aim to boost their average revenue per user. Experts suggest that telcos may need to adopt a differential pricing strategy, particularly for entry-level plans, to avoid burdening low-income customers with increased costs.
It is speculated that telecom prices could see a 20% hike following a period of stability that has lasted nearly two years. Brokerage firms are anticipating this increase, with Bank of America Securities even upgrading Bharti Airtel’s ratings in anticipation of a significant tariff adjustment. India currently offers some of the cheapest telecom rates globally, prompting telcos like Bharti Airtel, Reliance Jio, and Vodafone Idea to compete in a pricing race to attract subscribers, albeit at the expense of their profit margins.
With the recent investments in 5G infrastructure, telecom operators are under pressure to raise tariffs, a move that has been delayed due to the upcoming elections. However, industry analysts predict that tariff revisions could be on the horizon post-July, with expected increases ranging from 15 to 20 percent.
Earlier, in early 2021, telecom providers had already raised tariffs on entry-level and postpaid plans, leading to millions of subscribers discontinuing their services. The Telecom Regulatory Authority of India reported a decline in mobile subscriptions in states like Madhya Pradesh, Maharashtra, and Andhra Pradesh. The impact was felt by entry-level subscribers, especially those on tight budgets.
The impending tariff hikes may disproportionately affect low-income consumers who rely heavily on affordable mobile plans. Faisal Kawoosa of TechArc emphasized the importance of telcos using AI and offering differentiated plans to ensure that all users can access mobile connectivity, especially those on the brink of poverty.
In conclusion, as telcos gear up for potential tariff hikes post-elections, they must carefully consider the impact on low-income consumers and implement strategies to mitigate any adverse effects. Balancing the need for increased revenue with maintaining affordability for all customer segments will be crucial in the coming months.
