Impact of tariff hike on bottom line: Telecos set to rake in Rs 20k-cr addl profit

New Delhi: The latest round of 15-20 per cent mobile tariff hikes for prepaid and postpaid plans by telecom service providers (TSPs) can result in additional operating profits of around Rs20,000 crore for the industry once these hikes are fully absorbed, industry experts said on Friday. Bharti Airtel and Reliance Jio are likely to witness a significant average revenue per user (ARPU) benefit after the tariff hike. Vodafone Idea is yet to implement the mobile tariff hike.

“This will result in increased profit generation, thereby providing headroom for the industry to undertake deleveraging as well as fund capex for the technology upgrade as well as network expansion,” said Ankit Jain, Vice-President and Sector Head of Corporate Ratings, ICRA.

ICRA expects the industry revenues to grow by 12-14 per cent in FY25, which given the operating leverage, is likely to translate into healthy expansion in operating profits by 14-16 per cent.

The telecom industry is likely to report revenues of Rs3.2-3.3 lakh crore with operating profits of Rs1.6-1.7 lakh crore in FY25.

“The improvement in operating profits coupled with the muted participation in the latest spectrum auctions and expected moderation in the capex intensity, the debt levels are expected to moderate to around Rs6.2-6.3 lakh crore as on March 31, 2025, with the expectation of further decline going forward,” said ICRA.