Mobile bills may rise further as telcos keep adding subscribers
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New Delhi: Mobile tariffs could rise again towards the year-end, by 10-12%, especially for mid-and-higher paying consumers. Sharp rise in active subscribers in May, backed by a fifth straight month of net user additions, has stimulated telecom operators' appetite for a fresh round of tariff hikes , say industry executives and analysts. They, however, cautioned that base plan prices rose 11-23% during the last increase in July 2024 and any further increase could trigger higher subscriber churn.The next round could also see the introduction of tiered pricing where data allowances are reduced drastically to incentivise purchasing of more data packs, say experts.May saw a 29-month record surge of 7.4 million active users to nearly 1.08 billion. It marked the fifth straight month of growth in net user additions, rebounding from a cumulative 21 million loss between July-November. Market leader Reliance Jio Infocomm added 5.5 million active subscribers in May, increasing its active user base by 150 bps to 53%. Bharti Airtel added 1.3 million active subscribers, ending the month with a 36% share of active subscribers."The recent record pace of active subscribers additions in May is not just due to the general acceptance of past tariff hikes, but when the necessities-linked secondary SIMs return to the system," an industry executive told ET, asking not to be named, referring to high active user adds in May.With the tariff-centric consolidation now behind, future active user additions will be a function of 5G expansion and its adoption, the executive said. Strong subscriber growth by top operators like Jio creates a favourable environment for future tariff increases, according to brokerage Jefferies. It noted that Vodafone Idea 's continued user losses may drive further market share gains for Airtel and Jio, boosting monetisation through tariff adjustments for the two telcos Future tariff hikes, however, may see a more tiered approach after telcos raised base plans by 11-23% in July 2024, experts said, adding expectations are tempered on the quantum of hikes expected later this year.Analysts said the lower end of the subscriber base is already facing significant stress due to the sharp increase in basic plan prices. Targeting future hikes in middle and upper-level plans will lead to consolidation, instead of attrition, they said."It is likely that tariffs go up 10-12%...Future hikes are also unlikely to be uniform across all customer segments. There is a strong case for hiking prices primarily for middle and upper-band users," said another telecom industry analyst, requesting anonymity. Differentiated price hikes could see more pricing categories based on data usage, data speeds, or specific timings of high data usage, or even for users who consume very little data, experts said."We expect Indian telecom industry's revenue growth to remain in double digits over FY25-27, led by tariff hikes and customers upgrading to bundled plans," BNP Paribas said. Top Airtel and Vi executives have also backed a change in the tariff structure. Airtel MD Gopal Vittal, in a recent earnings call, said the current tariff structure is broken, with a 1-size-fits-all pricing model which is not appropriate for user upgradation.
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