Is Jio the Reason for the Fall of VI and Airtel ?

There has been a sudden increase in the prices of the Recharge Packs in the Telecom Industry in India. Telecom Giants like VI, Airtel, Jio has increased the prices of their data packs by 20-25%. So we have been using the data at very low cost since the arrival of the Jio. Before that all the other Telecom companies were selling data at a very high cost in India. But when Jio came with such low plans, the competition for other companies has increased. They has to lower the price of their plans to survive in this market. But the sudden change has made them face huge losses. So we'll discuss about the reasons that why has been these prices has increasing.

HUGE AGR DUES :

JIO PLANS IN 2017

So all these started when JIO came in the market. The other companies has to face huge losses. Companies like Reliance Communications, TATA Indicom, DOCOMO, Uninor, Aircel, etc had to face huge losses. All these companies were comparatively smaller than the mainstream companies like Vodafone, Idea and Airtel. These mainstream companies were not affected as much as smaller companies but their Revenue Per User has been decreased drastically. Some companies were even running on losses. Now the prices of the recharge packs has been increased because these companies has huge AGR Dues on them. AGR refers to revenues that are considered for payment of statutory dues. In October 2019, the supreme court had ordered the telecom operators to pay Rs 1. 19 Lakh Crores to the Department of Telecommunications as pending AGR Dues. Of this, VI's dues were Rs 58,254 Crores and Airtel's dues were Rs 43,980 Crores. So in order to pay these AGR Dues they have to increase their prices as they don't have any other option. 

THE 5G SPECTRUM :

So we all know that in near future we will be getting 5G technology. This 5G Technology is going to be very expensive and these companies are already in dues so when most likely JIO will come with their 5G technology in India these companies will not be able to cope with it. So they are trying to collect the capital for their 5G deployment in India. Already Telecom companies has started to test 5G network so it is possible that this might be one of the reason of the price hike in Telecom industry.

LOW ARPU :

Another reason might be Low ARPU of these companies. ARPU means Average Revenue Per User i.e, on average how much revenue does a company generate in one month from a user. It is usually between Rs 100-130 per user, but these has been reduced. In 2016 due to arrival of JIO many companies has to shut down due to losses and the user base has moved to JIO, VI, and Airtel. But the ARPU for VI and Airtel has been reduced so they tried to increase the price of their plans in order to maintain a good ARPU.