Mobile Bill May Rise by Up to 25% Post-General Election as Telecom Companies Set to Increase Rates

Mobile users could have to pay 25% more in their bills after the Lok Sabha election 2024 as telecom companies prepare for the fourth round of tariff hikes in recent years. This move would boost their average revenue per user (ARPU).

"We expect a meaningful hike of around 25% by the operators in the near term on the back of a stable competitive environment, their need to improve profitability following heavy 5G investment, and continued government support," said data by brokerage Axis Capital, reported by the Economic Times newspaper.

The report said that while the magnitude of the hike may seem significant, it should be manageable for both urban and rural users, particularly as data usage remains consistent. According to the report, for urban households, subscribers' spending on telecom would rise to 3.6% of total expenditure from 3.2%, while for rural subscribers, spending would increase to 5.9% from 5.2%.

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Jio reported an ARPU of Rs 181.7 for the quarter ending in March, while Bharti Airtel and VI had ARPU numbers of Rs 229 and ≥26, respectively, for the same period, as per Axis Capital's estimates.

Operators are expected to focus on monetizing their 5G capex investments by adjusting tariff rates of bundled packs, according to Peeyush Vaish, TMT industry leader at Deloitte, South Asia. "We expect a 10-15% increase in ARPU to add around Rs 100 per subscriber by the end of this calendar year, supported by price hikes for 4G/5G bundled packs and the discontinuation of low-value packs," he said.

Vaish also highlighted that consumers are likely to remain loyal as long as they receive high-speed connectivity, indicating a willingness to pay for telecom services. Analysts anticipate Bharti Airtel and Jio to be the primary beneficiaries of the wireless hike, with tariffs being increased thrice between 2019 and 2023.