Airtel, Vi follow Jio in raising tariffs; prices hiked by up to 21%

While Airtel and Jio's tariff hikes will be effective July 3, Vi will implement the higher tariffs from July 4

(This report has been updated)

Bharti Airtel and Vodafone Idea (Vi) on Friday announced a hike in mobile tariffs by up to 21 per cent.

This comes a day after market leader Reliance Jio implemented an across-the-board hike in tariffs.

While Airtel has raised tariffs by a lesser margin than Jio's 12-25 per cent, it includes Airtel's 2G subscriber base as well, a category Jio hasn’t touched. Vi also focussed mostly on unlimited data plans, with validity periods from 28 days to one year.

While Airtel and Jio's tariff hikes will be effective July 3, Vi will implement them from July 4, it said.

 

Airtel has raised the cost of its voice plans by 11 per cent. This increases the price of Airtel's cheapest monthly plan, which offers 2 GB data along with unlimited voice calling, to Rs 199, up from Rs 179 earlier. Prices of other plans ranging from Rs 455 to Rs 1,799 have seen similar hikes. The same has been mirrored by Vi.
 

Those with data prepaid plans have seen an average 17 per cent tariff rise. The annual and data add-on categories have also seen a rise.
 

In the data postpaid segment, generally considered a premium category, the telco has raised tariffs of its Rs 399, Rs 499, Rs 599 and Rs 999 plans by an average 15 per cent. 

Vi raised the tariffs of its postpaid plans, ranging from the Rs 401 plan for individual users, to the Rs 1,001 family plan with a total 260 GB data cap. These will now be Rs 451 and Rs 1,201, respectively, increases of 12 per cent and 20 per cent.
 

“We note that the magnitude of price increases is smaller than that announced by Jio, which effectively reduces Airtel's premium to Jio across pricing plans,” UBS said in an analyst report.
 

The last major industry-wide tariff increase had been rolled out in December 2021, when average prices had gone up 20 per cent. Bharti Airtel had led the increase at that point.
 

Before that, prices had last risen mainly in 2019, when Vodafone Idea (Vi) was the first to trigger a rise.
 

Airtel said its hike was because of the need to raise the average revenue per user (ARPU) in the mobile segment beyond Rs 300.
 

A key performance metric, Airtel’s ARPU is the highest among the country’s top telecom players 209, beating Jio’s Rs 181.7 and Vodafone Idea’s Rs 146.
 

However, Airtel ARPU growth had stagnated in recent quarters, rising only marginally from Rs 208 in Q3. Meanwhile, Jio's ARPU stagnated at Rs 181.7 for three quarters till March 2024.
 

In a note, Citi Research estimated Airtel's ARPU to reach Rs 235, Rs 270 and Rs 305 over FY25, FY26 and FY27, respectively.

Meanwhile, BNP Paribas forecasts a 17 per cent revenue growth for the company in FY25.
 

“We have ensured there is a modest price increase (less than 70 paise per day) on the entry-level plans, in order to eliminate any burden on budget-challenged consumers,” Airtel argued.

5G monetisation soon

Analysts said Airtel may soon follow Jio in monetising its 5G service as well.
 

Jio has announced that unlimited 5G will be available only to consumers on a 2GB/day or higher plan versus 1.5 GB/day earlier. Thereby, it pushed consumers on its lowest priced Rs 239 plan to pay Rs 349 now, BNP Paribas said.
 

However, Airtel may soon do the same. “For now, Bharti has left unlimited 5G untouched; Jio has raised the minimum bar for using 5G. With 28/22 per cent of data subs on 5G, we saw the 5G monetisation coming. This was reflected in Jio’s hike. Bharti has maintained its commentary on the need for ARPU repair and increasing it to Rs 300 in a year or so. Hence, we expect Bharti to start 5G monetisation soon,” Axis Capital said in a note.
 

The latest move is in line with analysts’ expectations of a tariff hike after the general elections. As of April-end, Airtel had a 33.1 per cent market share of the wireless subscribers in India, official data shows.
 

As many as 386.51 million of the 1.16 billion total mobile phone connections in the country run on the Airtel network. Meanwhile, Jio had 472.42 million subscribers.
 

The tariff hike is also set to influence the pace of adoption of 5G in the country. Both Jio and Airtel have offered 5G service at 4G prices. Jio had 108 million 5G customers at the end of the fourth quarter (January-March) of FY25, while Airtel had 72 million 5G subscribers.