An imminent increase in telecom service tariffs

Mumbai, Ta. 22 December 2020, Tuesday

The revenue of the country's telecom companies is projected to grow by 12 per cent in the next financial year due to rising user (ARPU) on average revenue and high data usage. Telecom companies are also likely to raise their tariffs again in the coming months. The tariff hike will boost the region's overall revenue, a rating agency said.

The increase in work-from-home and content viewing has led to an increase in telecom service usage. The ratings agency's report expects high consumption to be maintained.

As data requirements increase, customers are also upgrading the service from 3G to 3G, resulting in an increase in ARPUs and this growth will continue in the days to come.

On the one hand, revenue growth is expected, while on the other hand, the debt burden of telecom companies is expected to decline. Debts are being eased due to rights issues, QIP payments and inflows of additional sponsor funds.

The overall debt burden of telecom companies, which stood at Rs 5 lakh crore as on March 31, 2018, has come down to Rs 2.50 lakh crore at the end of March 31, 2020.

In addition, the government is providing support to the telecom sector. The government provided support last year by providing relief in spectrum auction installment payments. In addition, measures such as reduction in floor tariffs and levies for data are expected to support the sector.

The report notes that the telecom sector has not seen a significant impact on revenue from the lockdown due to coverage of essential services.