India's Telecom Giants Gear Up for 20-25% Tariff Hike Post-2024 Elections

India's major telecom operators, including Bharti Airtel and Jio, are expected to implement a 20-25% tariff hike after the 2024 parliamentary elections. The hike will enable operators to invest in network infrastructure and services, driving growth and innovation in the sector.

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Dil Bar Irshad
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India's Telecom Giants Gear Up for 20-25% Tariff Hike Post-2024 Elections

India's Telecom Giants Gear Up for 20-25% Tariff Hike Post-2024 Elections

India's telecom sector is on the verge of a significant shift as major operators, including Bharti Airtel and Jio, are expected to implement a substantial 20-25% tariff hike following the 2024 parliamentary elections. Global brokerage firm Bank of America Securities (BofA) predicts that this move will not result in a significant loss of subscribers, primarily because of the lack of alternatives and consumers' capacity to absorb the increased costs.

Why this matters: This tariff hike will have a ripple effect on the entire telecom industry, influencing the way operators invest in network infrastructure and services. The increased revenue generated from the hike will also impact the development of 5G technology and data services in India.

Several key factors are driving the anticipated tariff hike, including the telecom companies' willingness to participate in such a move, the growing stickiness of data offerings, and continued government support. Additionally, potential investments in data centers to capitalize on AI-led opportunities and a consensus among telcos to avoid disruptive pricing strategies are expected to contribute to the hike.

BofA considers Bharti Airtel to be the best-positioned entity to benefit from these hikes, while Indus Towers emerged their preferred pick in the telcos sector. The brokerage firm believes that the improving cash flows resulting from thetariff hikeswill be utilized by telcos to expand their high-margin fiber broadband services.

The tariff hikes are expected to occur after the general elections, with the possibility of another hike within the next 12 months as telcos seek to monetize their 5G investments. This move is anticipated to have a significant impact on the telecom sector, enabling operators to invest in expanding their services and improving network infrastructure.

In related news, BofA has upgrades Vodafone Idea Ltd's rating from 'Underperform' to 'Neutral', citing the company's high leverage for tariff hikes. The brokerage has also revised its price target for Vodafone Idea upward to Rs 14.5 per share from the previous target of Rs 9.4 per share.

Another significant development on the horizon is the potential IPO of Reliance Industries Ltd's (RIL) telecom arm, Jio. As one of the leading players in the Indian telecom market, Jio's IPO is expected to be a decisive event that could redefine the industry dynamics.

As India's telecom sector prepares for these transformative changes, the industry is on the cusp of growth and innovation. With the growing importance of data services and the advent of 5G technology, telecom operators are well-positioned to capitalize on emerging opportunities and drive the sector forward. The expected tariff hikes will play a vital role in enabling these advancements, providing the necessary financial resources for network expansion and service improvements.

Key Takeaways

  • India's telecom operators, including Airtel and Jio, to hike tariffs by 20-25% after 2024 elections.
  • Tariff hike expected to have minimal impact on subscriber base due to lack of alternatives.
  • Hike to drive investments in 5G tech, data services, and network infrastructure.
  • Bharti Airtel and Indus Towers seen as top beneficiaries of tariff hike.
  • Jio's potential IPO to be a game-changer for the Indian telecom industry.