3 Reasons Why Your Mobile Bill Will Rise By 30% This Year: Alert For Airtel, Jio, Vodafone Users!
As per the reports, the country’s billion-plus mobile users may have to brace for more sharp jumps in phone bills by end-2020.
Mobile Tariff Will Soon Increase Even More?
By the end of 2020, the telecom industry in the country is likely to raise prices by another 25-30% with average revenue per user (ARPU) still low and overall telecom-related consumer spends in India amongst the lowest globally, industry executives and analysts said.
Three Reasons Why You Will Pay 30% More For Mobile Bill
Reason #1: Telcos Need To Pay Rs 1.47 Lakh Crore
Staring at huge payouts after the telecom giants like Vodafone Idea and Bharti Airtel got no relief from the Supreme Court on their adjusted gross revenue (AGR) dues, would need to raise prices in a bid to rebuild financial strength.
Overall, private telcos need to pay Rs 1.47 lakh crore to Govt. While Airtel needs to pay Rs 35,000 crore, Vodafone needs to pay Rs 53,000 crore and Tata Teleservices Rs 13,800 crore.
If they indeed pay this huge amount to the Govt. then they will have to raise tariff to balance that.
Reason #2: Vodafone May Collapse, Creating Duopoly For Airtel-Jio
According to analysts, if Vodafone Idea were to collapse, as expected big price hikes from Bharti Airtel and Reliance Jio Infocomm in a private duopoly structure.
Although, with Vodafone Idea’s survival now in the balance if it fails to also secure any meaningful relief from the government, analysts expect the tariff hikes to happen quicker.
Experts claim that the actual timing of the next round of price hikes will hinge on Vodafone Idea’s survival.
While the struggling telco has said it is exploring further options, including filing of a curative petition in the top court.
Reason #3: India Still Has the Cheapest Internet Rates
According to analysts, the private telcos to leverage the fall in consumer-level telecom spends to 0.73% of GDP in the September quarter of FY20 from 1.25% just over three years ago, saying the scenario offers adequate headroom to push through a second round of price hikes.
The director at IIFL Securities,Sanjiv Bhasin said “With Arpus still well below the Rs 180-200 pre-Jio levels and a reduction in overall telecom-related consumer spending (as a percentage of GDP) over the past three years, there’s adequate scope for telcos to raise tariffs by another 30% later this year,”.
It’s almost a month since Bharti Airtel, Vodafone Idea and Reliance Jio had increased bundled prepaid tariffs by 14-33% for the first time in three years.
It’s expected to boost monthly APRU from the present Rs 120 level to around Rs 160, over a few quarters.
The director general of Cellular Operators Association of India (COAI), Rajan Mathews said “Even after the recent tariff hike (in December 2019), consumers are still paying a paltry 0.86% of per capita income for their communication needs, which is much lower than what it was four years ago,”, which represents Airtel, Jio and Vodafone Idea.
The consumer spends on communications in India are well below Singapore, Malaysia, China/Hong Kong, the Philippines, Japan, Australia, the US, the UK, Germany and France as per the analysts.
As the mobile internet consumption has soared over the past three years since Jio’s entry, mobile users, Bhasin said, also “won’t mind paying a little extra as data is now the new gold”.
They need to pay the government by January 23 as the nation’s top court has backed the government’s wider definition of AGR.
Research head at SBICap Securities, Rajiv Sharma, said any upward revision in tariffs beyond 15% in the next 6-to-9 months could lead to some user losses, given that half of India’s population have an annual income level under ?60,000 as per recent findings of the World Inequality Database.
We will keep you updated, as more details come in.