Diesel price rise likely to shave 100 bps off telcos’ margins

The recent increase in diesel rates for bulk industrial users is likely to inflate the overall network costs of India’s top telcos, Reliance Jio, Bharti Airtel and Vodafone Idea (Vi), denting operating margins by around 100 basis points (bps) in the June quarter.

One basis point is 0.01%.

Payouts toward diesel are a key component of a telco’s overall network costs, which are around 22-24% of sales. Diesel costs form part of a telco’s energy bill that also includes electricity costs (for grid support) and battery costs.