Telecom sector fundamentals continued to improve in Q4: Report

Our Bureau Mumbai | Updated on July 08, 2020 Published on July 08, 2020

The fundamentals of the telecom sector continued to improve in the fourth quarter of fiscal 2020, with all the three private telecom players recording a rise in average revenue per user (ARPU) and strong expansion in 4G customer base.

During the quarter, the ARPUs of Bharti Airtel, Vodafone Idea and Reliance Jio Infocomm (RJio) rose 14 per cent, 11 per cent and 2 per cent, respectively, on a quarter-on-quarter basis. This was driven by a 20 per cent tariff hike taken by the telcos in December 2019 and continued transition of customers from 2G and 3G to 4G, according to a report by India Ratings and Research (Ind-Ra).

Despite the strong 20 per cent tariff hike implemented by the telcos in the quarter, the churn rate has remained at a low level. This indicates that mobile customers have accepted the first round of tariff hikes without much resistance, it said.

The Covid-19-related lockdown has provided another strong fillip to the ongoing trend of 2G and 3G customers transitioning to 4G, driven by the needs of higher data download speed and limits.

The transition to 4G can add 6-7 per cent to ARPUs of Bharti Airtel and Vodafone Idea in FY21. However, should 4G data prices rise (amid rising usage per customer), the addition to ARPUs can go up to 8-12 per cent.

The floor price for data, if approved by the Telecom Regulatory Authority of India (TRAI) in the coming months, will be a significant relief to a sector beset with multiple challenges, it added.

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Published on July 08, 2020
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