${latestitem Title}

Market Share Priority for Indian Telcos
Telecom Operators Need More Money Out of Customers, But Why?
BSNL Employee Union Wants Government to Clear Dues
Vodafone Idea, Airtel Expected to See Strong ARPU Gains

Posted: 22 Aug 2021 10:57 AM PDT

Indian Telecom operators are going to keep their focus on capturing a larger chunk of the market instead of going all out with the tariff hikes in the short term. Peeyush Vaish, Partner and Telecom Sector Leader, Deloitte India, told PTI that Indian telcos will keep making small tweaks to their prepaid plans but will avoid any major change in tariffs as their sole focus would be on adding more subscribers. Vaish further said that there is a lot of headroom for the telcos to grow in the sector in areas such as 5G and broadband. 5G is definitely going to act as a catalyst for the operators to bring enterprise revenue.

Indian Telecom Operators have Learned Identifying Customers

Vaish said that Indian Telecom operators have learned how to identify customers better. Earlier, telcos used to offer plans with a one-size-fits-all mentality. But that has certainly changed now, and as per Vaish, in the last 6 to 8 months, the operators have started identifying premium as well as non-premium customers. Vaish said that operators might drop their low-end plans, but there won't be any big changes made to the tariffs. What he said is actually in line with what the operators are doing. Both Bharti Airtel and Vodafone Idea (Vi) have dropped their low-end prepaid plans, which used to cost Rs 49, and now the entry-level plan from both the telcos comes for Rs 79. According to Vaish, this won't affect the telcos' blended average revenue per user (ARPU) in a big way. Vaish said Indian Telecom operators would fixate on capturing a bigger market share since the tariffs are bound to change once 5G arrives in India. Thus, at that point in time, a larger market share would definitely help the operators. But this is not a positive note for Vodafone Idea (Vi), which is looking to increase tariffs as it is debt-laden.

Telecom Operators Need More Money Out of Customers, But Why?

Posted: 22 Aug 2021 03:23 AM PDT

There are a lot of talks about operators aiming for a higher average revenue per user (ARPU) in the industry. While there are many who understand the reason, there are many who question what would a higher ARPU change if there are overall profits in the books of the telcos. For example, why should Reliance Jio care about ARPU if it is making thousands of crores in profits? People who think this way would term 'tariff hikes' as totally pointless since that would only benefit the companies and increase costs for the customers. But that's not seeing the larger picture. Here's what you should know about why telcos are eyeing higher ARPUs.

Higher ARPUs Helps Telecom Operators to Sustain Profits With Fewer Customers

The thing is, regardless of the number of customers under their belt, the telcos need to make investments in spectrum, equipment, maintenance, pay salaries, pay off statutory dues, and then out of what's left, distribute amongst the investors. On top of this, there's a lot of money being spent on advertisements, research and development to come out with more innovative services; and this takes a lot of money. Subscribers keep on increasing and reducing; while that is uncertain, what can be ensured by the operators is regardless of the kind of subscriber base they have, they are earning more than they are spending. In India, telecom operators spend a lot of money on their networks and services but still offer data at very cheap rates. Cheap data reduces their earning per customer, which affects their overall profits or losses. Further, looking at low ARPU for the industry, new investors are afraid to jump in the ship because they are afraid of never getting their money back. For those who don't understand, it is the 'nature' of a business to maximise profits. The telecom operators are individual businesses that are backed by investors looking to make their money back and then earn profits as well. Thus, while you as a customer might not appreciate the operators going for a tariff hike to increase their ARPU, you as an investor might. Make no mistake; I am not asking you to invest in these companies; I am just giving you a perspective. While the operators have been investing in their networks heavily, their returns have been capped at a certain level because of the low ARPU. This might affect their ability to make future investments into 5G technology and other things. The telcos are not evil to go for high ARPU; they are just businesses like every other who want to earn more profits, and what's wrong with that if they are doing it fairly and still offering world-class cheap data rates. I know there are many who can't afford even the plans on the cheaper end today, and thus a tariff hike for high ARPU sounds insensitive. But there are also investors and these companies who need this to survive. So it's a dilemma that can only be solved if India's economy upgrades, but that is an entirely different conversation.

BSNL Employee Union Wants Government to Clear Dues

Posted: 21 Aug 2021 11:50 PM PDT

The employee union of Bharat Sanchar Nigam Limited (BSNL) wants the Indian government to clear the dues that it owes to the company. The employees want the money from the government to ensure that the telco can be put back on track. The Department of Telecommunications (DoT) owes about Rs 30,000 crores to BSNL, which includes Rs 13,789 crores under Viability Gap Funding (VGF) for rural telephony. According to a report from The Hindu, the union has been demanding the release of the funds for long now, and after much persuasion, the Telecom Minister coughed up Rs 282 crores. But there are still thousands of crores that the telco is entitled to get back from the government, and it is counting that it will receive it soon.

BSNL's Tight Situation Financially Isn't Helping

BSNL is in a tight situation financially. At the same time, the telco has to invest money into expanding its networks which won't be possible if it doesn't get the money from the government. Its falling subscribers aren't also helping. This money from the government can be used to put the telco back on track with expanding its 4G network infrastructure throughout the country. Mr Satyanarayana, President, BTEU, Visakhapatnam, said that the union has also requested the IT Minister, Ashwini Vaishnaw, for asking the relevant authorities inside the DoT for BSNL's initiation of 4G networks and services. Mr Satyanarayana said that BSNL is ready with 17,500 cell towers throughout India, and the towers have already been upgraded from 3G to 4G. All that is required is a nod from the government, and BSNL can start providing 4G services. BSNL is already very behind the private operators of the country, who are all leaping to provide 5G as soon as possible. BSNL desperately needs to make its 4G networks live in India so that it can become financially stable and look to upgrade to 5G in the coming years.

Vodafone Idea, Airtel Expected to See Strong ARPU Gains

Posted: 21 Aug 2021 06:39 PM PDT

Vodafone Idea and Bharti Airtel have not got any relief when it comes to the adjusted gross revenue (AGR) dues. Both the telcos have to pay thousands of crores in AGR dues to the government as per the Supreme Court (SC) order. While it is possible for Bharti Airtel to pay the dues comfortably, the same can't be said for Vodafone Idea, which is struggling with its financials a lot. A relief package from the government would help them quite a bit, but it won't be nearly enough for Vi. Both the telcos are eyeing an increase in average revenue per user (ARPU) in the near term so that they don't get any further stress on their financials.

ARPU Gain for Vodafone Idea and Bharti Airtel Should Come Soon

Both the telcos have already removed their entry-level prepaid plans of Rs 49, and now the minimum amount that a user can recharge with is Rs 79. This will help both Vodafone Idea and Bharti Airtel in increasing their ARPU. Regardless of whether these companies are adding subscribers or losing subscribers since they have removed their base plan, they should see a marginal increase in ARPU. Further, the no daily-data limit plans introduced recently will add to the ARPU gain for the telcos since they offer less data for more money relatively when compared with the unlimited data prepaid plans.

Vodafone Idea New REDX Plans In The Right Direction

Vodafone Idea's new REDX plans launched recently are further in the right direction. While Airtel already offered postpaid plans in the Rs 1,500 range, Vodafone Idea has just introduced new REDX plans in this range. This will give the customers of Vi an option to buy super premium postpaid plans. These postpaid plans come with REDX benefits which are just unlike what any other operator offers to its users. With this, both Vodafone Idea and Bharti Airtel are expected to further hike the tariffs of their existing prepaid plans, and it would lead to substantial ARPU gain. The tariff hikes have already started coming in an indirect way; thus, it won't be long when the operators go all out. Vi has been adding 4G subscribers even though it is losing 2G/3G subscribers along the way. This will give the telco power to earn more through its 4G subscribers when it increases tariffs. Vi's enterprise business is also expected to grow in the medium term, which is another way for the telco to earn more money.

Search This Blog

TELECOM TARIFF INDIA