Telcos seek to jack up tariffs further ahead of 5G spectrum auction
26 Dec 2019
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Cellular Operators Association of India (COAI) has pitched for a progressive hike in tariffs to address the financial distress of the telecom industry and prepare the industry for the roll-out of 5G technology.
The demand comes at a time when all three private telecom operators as well as state-run BSNL have effected a round of price hikes to partly address the losses to the industry after Reliance Jio entered the market with free voice calls and ultra low data charges.
Meanwhile, sector regulator Telecom Regulatory Authority of India (Trai) is also planning to implement a floor price for telecom services that, industry analysts say, will benefit Bharti Airtel and Vodafone Idea the most.
Trai has floated a consultation paper for setting floor pricing in the industry, and it is only a matter of time that the tariffs go up again in the coming weeks.
The latest tariff hike effected a few weeks ago has already raised telecom tariffs by up to 40 per cent.
Trai is currently expecting comments from the stakeholders and others after which it will come up with a solution.
While consumers and many analysts believe that it a not good move from the operators as they don’t have the capability to provide quality services, Rajan Mathews, the director general of COAI, believes that the tariff hike should happen to address the financial stress in the industry. Furthermore, he also added that the tariffs would be raised to meet the Rs200 ARPU.
COAI, which represents the telecom operators, also approached Trai to establish a floor pricing for data and voice in the industry, so that the customers can choose their next operator based on the quality.
ARPU of Airtel and Vodafone Idea used to be over Rs200 and both the companies used to charge around Rs250 for 1GB of 4G data. Reliance Jio changed this entirely with its cheap tariff plans and a majority of the customers inclined towards Jio because of the LTE-only network.
To compete with Jio and retain the market share, Airtel and Vodafone Idea came up with new tariff plans which almost matched Reliance Jio.
However, Airtel and Vodafone Idea will no longer be going after Reliance Jio as the telcos are facing several financial issues. There are even talks that Vodafone may exit the Indian market if there’s no relief from the government.
