As per a report by ICICI Securities, the proposed floor prices for data prices by the telecom operators, implies a 5x increase. However, it may not lead to same rise in average revenue per unit (ARPU).
According to ICICI, the proposed floor prices for data are Rs 20 to Rs 35 per GB compared to the current Rs 3.7 per GB – Rs 4 per GB, which implies a 5x increase. The brokerage firm reckons that it is not akin to ARPU increase due to huge allowance in data compared to usage, which means subscribers will downgrade plans based on data requirement or income levels.
Further, the report added that comparing the existing tariffs with the most conservative tariffs outlined by Bharti, bundled plans of 1GB per day and 1.5GB per day for 28 days will increase by 60 per cent – 80 per cent. Also, downgrade in data usage will help reduce congestion on networks, and improve realised data speed as well as reduce capacity-based capex.
Reliance Jio, Bharti Airtel and Vodafone Idea proposed floor data prices at Rs 20 (minimum), Rs 30 and Rs 35 per GB.
Operators have suggested the introduction of minimum subscription charges of Rs 40 – Rs 60 per month, and voice tariff at Rs 60 per month at least for bundled plans, which further adds to ARPU, the brokerage said.
Though tariffs are under forbearance, operators are not able to unilaterally take tariff hikes due to competitive intensity, and distrust among operators, ICICI Securities added.
Further, ICICI report adds that the firm is surprised to see Jio’s recommendation of charges for value-added services such as video-on-demand (VOD), and other apps, which it currently offers on a complementary basis. Value-added services contribute negligible revenue, and any effort to charge these services is a significant upside risk to our estimates.
Moreover, ICICI Securities said that conservatively it expects industry revenues to grow at 16.8 per cent compound annual growth rate (CAGR) over financial year (FY) 2020-FY 2025E driven by 19.2 per cent CAGR in ARPU.
