Airtel, Vodafone Idea to follow Jio in raising telecom tariffs
Airtel, Vodafone Idea to follow Jio in raising telecom tariffs
Bharti Airtel Ltd and Vodafone Idea Ltd are expected to raise telecom tariffs following Reliance Jio’s announcement of new unlimited plans that are set to take effect on July 3, people familiar with the development said.
Jio on Thursday revised tariffs and launched new unlimited plans. The move is aimed at boosting average revenue per user (ARPU).
Both Airtel and Vodafone Idea are expected to follow suit, having long advocated tariff increases as essential for sustainable growth.
The last industry-wide tariff hike of about 20% was in December 2021. Before that, telcos hiked tariffs in December 2019, the first one after Jio launched its service in 2016.
The 2019 hike increased the tariff by 20-40%, while the 2021 hike saw an increase of 20%, providing an ARPU uplift of Rs 30 and 36 over four quarters to Airtel, respectively.
The Sunil Mittal-led telco has repeatedly reiterated the need to increase the current ARPU from Rs 200 to Rs 300, given that India remains among the cheapest in the world.
Bharti Airtel’s managing director Gopal Vittal said during the Q4 earnings call on May 15 raised the pitch for hikes, saying that “substantial tariff repair” was needed across the industry as the current levels were “absurdly low”.
Vodafone Idea’s chief executive officer, Akshaya Moondra, also called for a tariff hike during an earnings call on May 17.
“We have been saying, and some of our competitors have also been mentioning, that some of the price recovery has to happen over some time in the form of expanding the higher pay more for using more, which has gone away from the market over the last few years,” Moondra said, adding that tariff correction critical for telcos to make reasonable returns.
Vodafone Idea’s turnaround strategy depends on tariff hikes. The company has been reporting losses and losing customers due to a lack of investment in network expansion. After the equity infusion through its Rs 18,000 crore follow-on public offering (FPO) in April this year, the telco is in talks with lenders to raise Rs 25,000 crore in debt for capex.
Analysts expect the industry growth rate to accelerate in coming quarters, led by tariff hikes.
BNP Paribas expects the Indian telecom industry’s revenue growth to remain in double digits over FY 24-26, led by tariff hikes and customers upgrading to bundled plans.
Analysts at ICICI Securities said all three telecom operators will fully convert the entire tariff hike into revenue without significant losses.
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