Airtel hiked the prices of its prepaid plans by up to 25% in November last year. Now just after a couple of months, seems like we are soon going to witness another prepaid tariff increase by the telecom player.
Bharti Airtel, CEO, Gopal Vittal, during the recent earnings call, has said that tariff hike would likely come this year. However, he revealed that the hike won’t be in the next three to four months. The full impact of the revised mobile tariffs will be visible in the fourth quarter.
“I do expect a tariff hike sometime in 2022. I don’t think it’s going to happen in the next 3-4 months because the SIM consolidation and growth needs to come back but I do expect another round of tariff increase. Of course, it got to be determined by the competitors’ dynamics. We would not hesitate to lead just as we have done in the recent past,” Gopal Vittal said.
ARPU Level of Rs 300 Required
He further said “We hope that the APRU of the industry, our APRU gets to Rs 200 soon preferrably in 2022 itself then roughly settles soon after in the next few years to Rs 300 which is the modest and good level of ARPU which can then turn return on capital of 15 per cent.”
In its third-quarter result released this week, the company reported a 2.8% drop in its net profit to Rs 830 crore as against Rs 854 crore in the year-ago period. Its revenue from operations rose 13% year-on-year. However, the company improved its ARPU to Rs 163, up from 146 a year ago.
Bharti Airtel has always maintained that the mobile Average Revenue Per User (ARPU) needs to be at Rs 200 and ultimately at Rs 300. Without reaching the Rs 300 ARPU level, Airtel wouldn’t be able to get a 15% RoCE (Return on Capital Employed), Vittal said.
Vittal said the industry is hoping for substantial reduction in reserve price for 5G tariffs. He also added only 3-4% of smartphone units in India were 5G-enabled, which is likely to reach 10-12% by March 2023. The pace of 5G adoption from a consumer standpoint would only happen by FY24, he indicated.
In November 2021, Reliance Jio, Bharti Airtel, and Vodafone Idea had hiked their prepaid tariff by 20-25% for the main reason of increasing the average revenue per user (ARPU).