Airtel Eyes Tariff Hike in 2022 To Increase Average Revenue Per User

Last Updated on February 11, 2022 by Anu Joy

Airtel Managing Director Gopal Vittal has said that Bharti Airtel may hike its mobile call and services rates this year, in a bid to boost its average revenue per user (ARPU) to ₹200. Vittal added that going forward, it will eventually be increased to ₹300. Just last year in November, the telecom operator had increased tariffs for prepaid plans by a whopping 25 percent.  

Airtel Third Quarter Earnings

However, the Airtel exec clarified that the price hike will not take place immediately as the current process of SIM consolidation needs to come to an end. The company detailed a 2.8 percent fall in its consolidated net profit to ₹830 crore in the third quarter ending in December 31, 2021. Last year’s consolidated net profit in the same period was ₹854 crore. The consolidated revenue of Bharti Airtel rose to ₹29,867 crore during the third quarter from last year’s ₹26,518 crore in the same quarter, registering an increase of nearly 12 percent.

At Airtel’s fiscal third quarter earnings call, Vittal said:

Tariffs remain abysmally low in India and another round of price hikes will likely happen in 2022, although it won’t in the next 3-to-4 months as the current (wave of) SIM consolidation caused by the last round of hikes needs to come down.

We hope that the ARPU of the industry, our ARPU gets to ₹200 soon, preferably in 2022 itself, then roughly settles soon after in the next few years to ₹300, which is the modest and good level of ARPU which can then turn return on capital of 15 per cent.

Airtel To Use $300 Million To Support Device Upgrades and Cloud Technology

Just this month, Google announced that it will be investing up to $1 billion in Airtel as part of its Google for India Digitization Fund. The Airtel MD said that the company will be using the $300 million (around ₹2,250 crore) corpus to support device upgradation, network, as well as cloud business.

The big opportunity for us is to upgrade from feature phone to smartphone. We have developed several capabilities. Software features will enable us to lock a phone on the fly if an EMI is not paid. There are platforms that we are working with to actually lend into devices in order to bring down the unit price of the device.

It remains to be seen if Airtel will raise tariff prices this year, or if it will spill over to the next year. Taking into consideration that Airtel had increased tariff rates by 25 percent just a few months back, do you think another price hike is justified? Let us know in the comments.