Rs 20,000 cr! Mobile tariff hike will lead to operating profits for telcos, say experts

New Delhi: Industry experts indicated on Friday that the recent increase of 15-20% in mobile tariffs for prepaid and postpaid plans by telecom service providers (TSPs) could potentially boost the industry's operating profits by approximately Rs 20,000 crore once the hikes take full effect.

Following these adjustments, Bharti Airtel and Reliance Jio are expected to experience notable improvements in their average revenue per user (ARPU). Meanwhile, Vodafone Idea has yet to implement similar increases in mobile tariffs.

"This will result in increased profit generation, thereby providing headroom for the industry to undertake deleveraging as well as fund capex for the technology upgrade as well as network expansion," said Ankit Jain, Vice President and Sector Head of Corporate Ratings, ICRA.

According to ICRA, the telecom industry is anticipated to achieve revenue growth of 12-14% in FY25. This growth, coupled with operating leverage, is expected to lead to a robust increase in operating profits, projected at 14-16%.

In the fiscal year 2025, the telecom sector is forecasted to generate revenues ranging between Rs 3.2 lakh crore and Rs 3.3 lakh crore, with corresponding operating profits expected to range from Rs 1.6 lakh crore to Rs 1.7 lakh crore.

"The improvement in operating profits coupled with the muted participation in the latest spectrum auctions and expected moderation in the capex intensity, the debt levels are expected to moderate to around Rs 6.2-6.3 lakh crore as of March 31, 2025, with the expectation of further decline going forward," said ICRA.

According to a note by Morgan Stanley, we expect other players, including Bharti Airtel, to follow and announce price increases soon for 4G subscribers.

"We estimate that blended ARPU would benefit in the range of 16-18 per cent for Bharti Airtel and Reliance Jio," said the note. IANS