Airtel customers are going to get another setback amid rising inflation. Airtel is going to increase the prices of its prepaid plans once again. This time, the average revenue per user (ARPU) will be set at Rs 200. This has also confirmed by Airtel CEO Gopal Vittal. Last year also, the three main telecom companies of the country Airtel, Vodafone Idea, and Reliance Jio launched their prepaid recharge plans (Prepaid Plan) was increased by 18 to 25 percent.
“The tariff hike announced by a major telecom operator is a much-needed step towards healing the profitability and the returns profile of the sector. It will also enable telcos to invest in rolling out 5G mobile services over the medium term,” rating agency Crisil Ratings said in a report. The telecom operators are not happy with TRAI’s recommendation for 5G reverse prices.
Why Bharti Airtel decide to hike its tariff across prepaid plans?
Ever since the entry of Mukesh Ambani-backed Reliance Jio Infocomm, the telcos have been undercutting each other by slashing call as well as data usage rates. The competition has been so intense for the past five years that some telcos shut shop while others, such as Vodafone and Idea, decided to join hands in a bit to survive the onslaught brought on by the deep pockets of Reliance Jio.
The situation was so dire that telcos sought government intervention in some form to ensure there was a floor for tariffs. While the government did not intervene in any form, telcos themselves decided to collectively raise their tariffs. Among the telcos, Bharti Airtel has been vocal about the need to take the average revenue per user (ARPU) level back to Rs 300, as against the Rs 100-150 mark that it is oscillating in currently. In a statement, the telco said the tariff hike would allow it to mark the start of returning to Rs 200 ARPU, and that it would “enable the substantial investments required in networks and spectrum”.
Airtel CEO hints at tariff hike in 2022
Airtel reported a 2.8 percent year-on-year dip in net profit in Q3 FY 22 due to higher tax outgo. Net profit in the quarter stood at Rs 830 crore. The company generated a free cash flow of Rs 8803 crore in the third quarter up from Rs 7046 crore in the previous year. Bharti group director (strategy and business development) Harjeet Kohli said the company would use its free cash flows to reduce high-cost debt.
The company faced cost pressures due to rising diesel costs and its operational expenses also saw an increase due to faster network rollout and capacity enhancements. Vittal said the company is taking a slew of measures to reduce costs and complexities including the use of artificial intelligence to lower energy costs and renegotiation of telecom tower rents.
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