Why has Sunil Bharti Mittal of Bharti Airtel been calling for telecom tariff hikes?

Will there be a tariff hike or will there not be a hike; appears to be the million dollar question. However, irrespective of the answer, even the chairman of Bharti Airtel believes that a tariff hike is inevitable if the telecom business has to remain viable.

Telecom tariff hike has been the big bone of contention in last few months and now even Sunil Bharti Mittal of Bharti Airtel has underlined that current ARPUs or average revenue per user were literally unsustainable. Tariff cuts became the norm after the entry of Jio.

The problem is already a lot more acute for Bharti and Vodafone as they have massive outstanding amounts payable to the Department of Telecom as AGR charges and also spectrum fees payable to the government of India.

Mittal feels that such large sums would be impossible to service through internal cash flows unless tariffs were hiked from current levels. Telecom players like Bharti and Vodafone want ARPU to rise to Rs.200 and later to Rs.300 as against Rs.150 today. In a competitive scenario, that surely looks like a huge challenge.