By the middle of 2023, mobile companies are likely to raise prices. “The average revenue per user (ARPU) increase from 5G is likely to be small in the near future, so 4G prepaid tariff hikes are still the most important way for telcos to increase ARPU. In a report, the brokerage firm IIFL Securities said, “We see a higher chance that 4G prepaid rates will go up around the middle of 2023.” It also said that raising tariffs closer to the 2024 elections makes the chance of political backlash higher.
Prepaid and Postpaid Plans May Rise
There is a good chance that both prepaid and postpaid plans will have their prices raised by telecom companies. Analysts think that even postpaid users may have to pay more for their plans if the share of postpaid revenue keeps going down.
5g Plans Increase Separately
Airtel and Reliance Jio have both stated categorically that they do not intend to provide 5G as a premium service. This means that users can continue to enjoy 5G services with their current mobile plans. Yes, a minimum price plan will be necessary to access 5G services, as it is now. Airtel and Reliance Jio both provide 5G services for prepaid plans priced over a specific threshold.
Reasons Why Your Monthly Mobile Bill Can Go Higher
All of the country’s telecom companies have agreed to spend a lot of money each year on spectrum costs and are investing in the rollout of their 5G networks. Analysts say that to do all of this, they will need to make sure that the average revenue per user (ARPU) goes up. ARPU is expected to go up when more people use 5G, but this could take a few quarters or even longer. In the meantime, raising prices seems like a better option.
Why It May Be Important for Reliance Jio and Vodafone to Raise Their Prices?
Prices need to go up at all three businesses. Vodafone Idea needs to raise its prices by at least 25% in the near future to pay off its debts. By 2027, it will need to raise its prices, even more, to pay off its debts to the government of India. The parent company of Reliance Jio, Reliance Industries (RIL), has said that the telco may go public in 18 to 24 months.
Analysts say that to do this, earnings before interest, taxes, depreciation, amortization (Ebitda), and free cash flows will need to get better. As for Airtel, spending on 5G infrastructure has caused the company’s capital expenditures, or capex, to rise. This means that the company needs to raise prices to stay in business in the long term.