Telcos, which are expected to pump in cash in the upcoming spectrum auctions (some to retain waves while others to expand operations), will have to raise their blended average voice and data revenue minute (ARPM) by 5 paise to generate the cash flow needed to offset spectrum costs, says a report by Crisil Ratings.
Considering that over the last 18 months, the telecom industry has seen its ARPM increase by just 2-3 paise to 47 paise due to a boom in data and selective tariff hikes, increasing the ARPM by as much as 5 paise looks like an uphill task.
“Another increase of 5 paise will not be an easy task in the face of intensifying competition, especially in data,” said Crisil Ratings director Manoj Damle, one of the authors of the agency’s latest report.
“The ability to increase ARPM will be a key monitorable.”
It would be interesting to see how telcos achieve a significant increase in their ARPM in the coming days as most telcos are wary of increasing the headline tariff.
Idea Cellular chief executive Himanshu Kapania had told FE in an interview that the telco had no plans to hike headline tariff.
Analysts and industry experts expect telcos’ blended ARPM to rise over the next two quarters. However, growth is not expected to clock over 5 paise, which is needed by some players to offset the costs. A recent ICICI Direct report estimated that Bharti Airtel’s blended ARPM would increase to 48.4 paisa by FY16.