Telecom industry body Cellular Operators Association of India (COAI) on Thursday said a tariff hike is essential for a smooth run as telcos are spending more every year on network expansions but not getting enough in return.

“If you look at from the gross revenue that we collect versus what we spend, there is a deficit. Last year, there was a deficit of ₹10,000 crore, so from where is that deficit going to be made up? One is from tariffs, but it can’t be made up only by tariffs,” SP Kochhar, Director General, COAI, told businessline on the sidelines of India Mobile Congress (IMC) 2024.

He said the telecom industry has proven that mathematically, it requires 50 crore new subscribers every year to make up the current average revenue per user (ARPU), but it is not possible to achieve.

“So the other way is, you get money from large traffic generators (LTGs), who are riding on our network. They should pay for this infrastructure. The third is, government should reduce the cost of spectrum and licence fee,” Kochhar said.

He argued that LTGs or over the top players (OTTs) are riding on the telecom network, but not sharing their revenues with the telcos, whereas telcos are the ones who are investing every year on network expansions and licence fee.

“Therefore, anyhow this deficit has to be made up and there are three ways of making it up — people who use the network should pay; second, government should look at it realistically to reduce the cost burden on TSPs; and third and the last option, of course, is to increase the tariff,” Kochhar added.

Increasing rates

Telecom player Bharti Airtel has been maintaining that the mobile ARPU needs to be upwards of ₹300 to enable “a financially-healthy business model for telcos in India”, and towards that it had announced a tariff hike effective July to monthly minimum plan of ₹199, which used to be ₹179 earlier.

Its maximum plan has now gone up to ₹3,599 since July from ₹2,999 earlier.

Similarly, Reliance Jio, since July 3, has increased the minimum tariff to ₹189 from ₹155 earlier and for maximum, it has revised to ₹3,599 from ₹2,999 earlier. Vodafone-Idea also has increased its minimum tariff to ₹199 from earlier ₹179 and maximum to ₹3,499 from ₹2,899 earlier.