Explained: Why your phone bills can get very expensive soon; check by how much
Smartphone users in India have been enjoying cheaper data rates for a long time. This was courtesy the introduction of Reliance Jio and high penetration of smartphones in Tier II and Tier III cities. But, analysts always said that sooner or later, this vacation will be over. Seems like it is about to happen.
Smartphone users in India have been enjoying cheaper data rates for a long time. This was courtesy the introduction of Reliance Jio and high penetration of smartphones in Tier II and Tier III cities. But, analysts always said that sooner or later, this vacation will be over. Seems like it is about to happen. Don’t be surprised if your phone bills get expensive in the coming days.
Most telecom operators in India have been struggling and owe millions in dues. Among the three major players, Reliance Jio has taken a clear lead with 34% wireless market share, while Bharti Airtel and Vodafone Idea stand at 28% and 28% respectively. In March, Vodafone Idea reported a drop of 6.3 million subscribers. Airtel lost 1.2 million users. Jio has meanwhile added 4.7 million subscribers in the same month.
Strong Measures Not Far
This leaves most telecom operators with no other option but to charge more from the customers. Jio's entry had shaken the incumbent players. It disrupted the market with free data and unlimited voice calls. Every player had been forced to slash rates to stay afloat in competition.
This has hit the telecom operators hard, making operations financially unviable. In such a situation, it is logical that all players will try and raise rates.
Supreme Court Verdict on AGR Dues
The recent Supreme Court decision on AGR dues comes as another challenge for the telecom operators. The SC has asked telcos to clear 10% of their AGR dues by March 31, 2021 and the remaining in installments over the 10 year period starting April 1, 2021, by the 7th of February every year.
To cover this, cost phone bills can be increased by 10 per cent, said brokerage firm Jefferies.
"In our view, another round of minimum 10% tariff hike is likely in the near term," said Jefferies, adding that Vodafone Idea may need additional support from the government in the form of a further two-year moratorium on deferred spectrum liabilities to remain solvent beyond FY23.
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