Investing.com — The telecom giant Bharti Airtel (NS:) has announced on Monday that it will raise its prepaid tariffs by 20-25%, starting November 26, 2021, in order to increase its average revenue per user (ARPU).
The Sunil Mittal-led telco currently has an ARPU of Rs 153, while its competitors Reliance (NS:) Jio and Vodafone Idea (NS:) have ARPUs of Rs 144 and Rs 109, respectively.
Bharti Airtel aims to maintain its mobile ARPU at Rs 200 in the near term and consequently raise it to Rs 300 in the future to ‘provide a reasonable return on capital’, which ultimately turns its business into a financially healthy model, stated the telecom giant in a statement on Monday morning.
The tariff hike, to be rolled out from Nov 26 would allow the necessary elbow room for the telco to roll out 5G in the country.
Market experts and analysts of the sector have been waiting for a new round of tariff hikes, as they believe it to be a necessary step to increase the telcos’ ARPUs for driving revenue growth amid rising competition.
Brokerage firm BNP Paribas (PA:) is of the view that big players like Reliance Jio and Bharti Airtel should prioritise tariff hikes over market share gains to accelerate revenue growth.
A step in this direction is of greater importance to Vodafone Idea than its competitors, as the loss-making telco can boost revenue growth per user, generate cash, and prevent revenue share erosion, by implementing tariff hikes.