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TRAI's first tranche of tariff hike for analog areas comes into effect

02-April-2014
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TRAI's first tranche of tariff hike for analog areas comes into effect

In a major boost to broadcasters, the Telecom Regulatory Authority of India (TRAI) has announced a 27.5 per cent inflation-linked tariff hike for analog cable areas. The hike, which comes after a gap of almost five years, will be implemented in two instalments – while the first installment of 15 per cent came into effect from April 1, 2014, the second installment of 12.5 per cent will be effective from January 1, 2015.

With this hike, consumer ARPU should increase and accordingly contracts signed on Reference Interconnect Offer (RIO) basis should see a surge.

It will also lend higher bargaining power to broadcasters when fixed fee deals come up for negotiations. Though this order is only for analog areas, DTH as well as DAS area deals are also expected to be revised upwards.

Since MSOs and DTH operators will have to shell out higher content fees to broadcasters, ZEE, Sun TV and TV18 Broadcast are expected to be the biggest beneficiaries in the listed space.

The last time that TRAI had allowed a tariff hike (7 per cent) was in 2009.

Broadcasters are viewing the current hike as a step towards eventual de-freezing of TV tariffs and expect DTH companies to initiate ARPU hikes, followed by MSOs.

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