Telecom services will continue to become expensive in future; Claim in the report
New Delhi| The report by Centrum Institutional Research claims that telecom companies are planning to increase average revenue per user (ARPU). The price increase will lead most consumers to turn to premium plans, which will lead to higher expenses per user and increase companies’ revenues.
The report said the Indian telecom sector is currently going through a critical phase. Competitive intensity has decreased. Earlier, Motilal Oswal had said, considering investment and customer data consumption, the returns of the industry are still very low. Therefore, companies will increase tariffs more often in the coming years. After signing an agreement with Airtel and Reliance Jio in India, Elon Musk’s satellite internet company Starlink is also in discussions with Vodafone Idea.
Report says…Starlink may face challenges due to regulatory hurdles in India, high import taxes and the need for competitive pricing in a market known for low-cost broadband services.
Companies’ revenue doubled in five years
The report said that the revenue of telecom companies has almost doubled in the last five years. Their profitability is also improving. Operating costs are stabilizing and margins are strengthening. Companies have slowed down their capital spending following the arrival of 5 G services, which could boost free cash flow in FYs 2025-26 and 2026-27.
Continued decline in the number of 2 G customers
According to the report, the number of 2 G customers in India is continuously decreasing with the increasing use of 4 G and 5 G. This number will become negligible in the next five-six years. Currently 25 million customers are still using 2 G services. Among these, Vodafone Idea has the highest share at 40 per cent. Airtel has 23 percent 2 G customers.
Demand for higher priced data plans
Telecommunications customers leaving 2 G to adopt 4 G services. Besides, the number of postpaid customers is also increasing. This change is improving overall revenue per user. Additionally, data consumption is increasing. Customers are choosing higher priced data plans. There has also been a significant increase in services like international roaming and OTT subscription.
The satellite communications sector is moving on the path of expansion
India’s satellite communications sector is also expanding. It is being supported by government initiatives such as the Telecommunications Technology Development Fund Scheme and the Telecommunications Act-2023. Open FDI policies, advances in quantum satellite technology and the expansion of VSAT networks are driving innovation in this area.
