New Delhi 22 November : .The telecom operator Bharti Airtel raised the prepaid tariff Monday, a move that CRISIL Ratings described as a necessary step in the recovery of profitability and returns. Airtel will increase its prepaid tariff approximately 20%, effective November 26,
According to the rating agency, the revision of tariffs will allow telecom companies invest over the medium term in 5G mobile service.
Telecom is a capital-intensive industry because it needs continuous technological advancement.
Between fiscal 2017 and 2021, the major players have already spent Rs 5 lakh crore to rollout 4G services.The ratings agency stated that telcos will need to spend at least Rs.70,000 crore in the next fiscal 5G spectrum auction, if bidding is fair.”
According to the rating agency, Indian telecom companies have the second highest average data traffic per user, but the ARPU per month is among the lowest in the world.
It stated that if other telcos do the same with increasing data usage, then the sector’s ARPU should rise by 15-20% to Rs.155-160 next financial from Rs.135 last year, and its return on capital to 7%.
The sector has a high level of operating leverage and the tariff increase will boost its EBITDA (EBITDA) by 40% to Rs.1 lakh crore for fiscal 2023, compared with fiscal 2021.It stated that the last sector-wide tariff increase in December 2019 had increased the sector’s ARPU to 15% and raised its EBITDA 35% to Rs 72,000 crore for fiscal 2021.
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