Expect a Rise in Mobile Services Cost Post-Elections

Mobile users in India may have to brace themselves for higher monthly bills as analysts predict that mobile tariffs will increase up to 20% in the second half of 2024, after the general elections. The reason behind this expected hike is the need for telecom operators to monetise their services and recover their investments in spectrum and infrastructure.

Industry-wide tariff hike likely

According to a report by BNP Paribas, a global brokerage firm, telecom tariff hike is a matter of time and 2024 will be a strong year for the industry, with a mid-year tariff hike and moderation or slowdown in capex. The report also suggests that the industry is moving towards a duopoly, with a large divergence in capex between the three operators – Reliance Jio, Bharti Airtel and Vodafone Idea.

Another report by CLSA, another global brokerage firm, also echoes the same sentiment and says that 2024 will be the year of tariff hikes, in addition to rising data penetration and usage. The report estimates that the mobile sector revenue will grow in 2024 as well, after a 10% growth in 2023.

The last industry-wide tariff hike was done in December 2021, when all three operators increased their prepaid plans by 20-25%. Since then, the operators have been focusing on improving their average revenue per user (ARPU) and reducing their debt.

5G services rollout and tariffs

Another factor that may influence the mobile tariffs is the rollout of 5G services, which is expected to be completed by the end of 2024. The operators have already acquired spectrum for 5G in the auctions held in March 2023 and have been testing their networks in various cities.

However, the uptake of 5G services may not be very high initially, due to the lack of affordable devices and content. Therefore, the operators may introduce separate tariffs for 5G services, which may be higher than the existing 4G tariffs. This may also create an opportunity for them to increase their ARPU and margins.

The introduction of 5G tariffs may also depend on the competitive dynamics of the industry and the regulatory environment. The operators may have to balance their pricing strategy with their customer retention and acquisition goals.

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