The country’s top three private telecom operators will resort to another round of tariff hikes in the second half of the current fiscal and will close FY23 with revenue growth of 20-25 percent, a report said on Tuesday.

Growth in average revenue per user is essential for the industry to invest in the network and spectrum, and if they do not do so, it can result in poor service offerings, domestic rating agency Crisil’s research wing said in a report.

After years of intense competition following the entry of the deep-pocketed Reliance Jio, the industry had started hiking tariffs in December 2019, stated a PTI report from Mumbai.

“…revenue of the top three players is expected to grow a robust 20-25 percent this fiscal,” the note said, adding that the operating profit margin will expand by 1.80-2.20 percent during the fiscal.

It said after a slow five percent growth in the ARPU (average revenue per user) in FY22, the crucial number is set to grow by 15-20 percent in FY23 as the full impact of the hikes carried out in the previous fiscal plays out, and also on the back of the newer hikes, which are expected in the second half of the current fiscal.

Since players are expected to spend incrementally on the network and regulatory capex in FY23, ARPU growth and tariff hikes could ease some pressure on their books, it said.

In the fiscal gone by, there was a fall in the overall number of subscribers as 37 million inactive users were weeded out, the report said, adding that the active subscribers rose during the year.

The three top telcos witnessed a three percent rise in the number of active users by adding 29 million subscribers to the tally, it said.

Reliance Jio saw its total subscriber base fall sharply between August 2021 and February 2022. However, the share of its active subscribers reached 94 percent in March 2022, compared with 78 percent in the first quarter of last fiscal, it said, adding that Bharti Airtel added 1.10 crore active subscribers during the fiscal year to take its share of active users to 99 percent.

For Vodafone Idea, it was a “mixed bag” during FY23 as the company lost 30 million active subscribers because of low capex in 4G and “deterioration of services”, the rating agency said.