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19 minutes agoAuthor: Priyank Dwivedi
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Your mobile bill can now be expensive every month. The country’s three big telecom companies Vodafone-Idea, Airtel and Reliance Jio are set to increase tariffs by 20%. Vodafone-Idea can increase the tariff first. After that Airtel and Jio can also make tariff plans expensive. The increase in tariff means that if you used to spend 100 rupees on the mobile bill earlier every month, now you will have to spend 120 rupees. But the question is that what has happened that companies are preparing to increase tariffs? Let’s know …
This is so that user earning can increase
Telecom companies have incurred major losses since the arrival of Reliance Jio. It can also be understood that till the arrival of Jio, there were 9 private companies in the country, but now only Jio, Airtel and Vodafone-Idea are left.
The arrival of Jio triggered a price war in the telecom industry. The result was that companies had to reduce their tariff prices. This not only affected their revenue, but also reduced the revenue from a user.
According to the Telecom Regulatory Authority of India (TRAI), in June 2016 before Jio’s arrival, companies earned an average of Rs 155 per month from a user. Of this, 126 rupees were earned from calling and other services, while 29 rupees were earned from internet data. This is called Average Revenue on User (ARPU). The average ARPU of companies has reached Rs 90 in June 2020. That is also because the companies had increased tariffs in between. Otherwise, ARPU was reduced to Rs 69 in June 2018.
How will the 20% increase affect you and the companies?
You are the user: Obviously increasing your 20% tariff will also make your mobile recharge 20% costlier. If now you recharge Rs 100 in a month, then after the increase you will have to recharge Rs 120.
On companies: Increasing the 20% tariff will increase the ARPU of companies. This will also increase their earnings. For example, in September 2020 Jio’s ARPU stood at Rs 145. After 20% increase, it can be up to Rs 174. That is, Jio will earn an average of Rs 174 per month from a user. As of September 2020, Jio has 40.56 million users. That is, it can earn more than Rs 7,057 crore. However, this figure is approximate and may be more or less. According to what and how much these companies will increase the service, it can increase or decrease accordingly.
Why were companies forced to increase tariffs? There are two reasons for this
First: two companies in loss except Jio
According to the September quarter data, Jio is the only telecom company that has been profitable. It has gained Rs 2,844 crore in the September quarter i.e. July to September. Vodafone-Idea lost 7,218 and Airtel Rs 763 crore in the quarter.
Second: the outstanding AGR is also to be repaid
The Supreme Court ruled in September in the case of repaying AGRs owed to telecom companies. According to the Supreme Court ruling, companies have to repay the outstanding AGR in the next 10 years. Whereas, by 31 March 2021, 10% of the total dues are to be paid. There is also a loan of Rs 88,251 crore on Airtel and Rs 1.14 lakh crore on Vodafone-Idea till September 2020. These two companies have the highest AGR above them.
AGR means adjusted gross revenue telecom companies pay the government for usage and licensing fees.