According to a recent report by India Ratings and Research, the interconnect usage charge (IUC) in 2021 has dragged down the average revenue per user (ARPU) of telcos, despite them reporting strong user addition in the January-March 2021 quarter.
As per the Telecom Regulatory Authority of India (TRAI) data, India’s wireless subscriber base grew by 8.3 million to total 1,168 million users in the month of February 2021 which is the highest addition in the last one and a half year, India Ratings said. Further, it added that the sliding voice tariffs, growing data tariffs, increasing data usage per subscriber, increasing data subscribers in the overall subscriber base and reducing tariff differentials among the telcos, over the last one year, indicate that the industry is moving towards a higher ARPU regime. As per India Ratings, there is a need to monitor the movement in ARPU over the next two to three quarters.
Meanwhile, on the 5G spectrum auctions, the report added that there are still many variables and unknowns that need to be addressed for the successful implementation of the 5G technology in India, such as reserve price for 5G auctions, incremental users and ARPU and capex to be incurred by telcos. The Department of Telecommunications (DoT) is already considering a cut in the base price of 5G airwaves and the 700MHz band in addition to a lesser upfront payment, as per some of the news reports, which is yet to be announced and remains a key monitorable for 5G auctions, India Ratings said.
