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Unanticipated tariff Hikes: Why Vodafone Idea, Jio, and Airtel raised prices

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From July 4, 2024 pioneer Indian telecom operators like Vodafone Idea(VI), Reliance Jio, and Bharti Airtel have all recently announced that they are going to increase prices of their prepaid and postpaid plans. Reliance Jio was the first who announce the hike in tariff.

Details of the tariff Hikes:

Details of the tariff hikes of Vodafone Idea(VI), Reliance Jio, and Airtel are the following.

  1. Vodafone Idea(VI) : 
  • Increased the entry-level plan (28-day validity) by 11% to ₹199 from ₹179.
  • Raised the price of a popular 84-day validity plan with 1.5GB/day to ₹859 from ₹719.
  • Increased the price of its annual unlimited plan by 21% to ₹3,499 from ₹2,899
  1. Reliance Jio:
  • Raised tariffs by 12-25%, with the steepest hike in some of its more premium plans.
  • The most active plan (28-day validity with 1.5GB/day) saw a 25% hike 
  1. Bharti Airtel:
  • Increased prices by 11-21% across prepaid and postpaid plans.
  • Raised tariffs in the ballpark range of about 11% for unlimited voice plans.
  • The daily data plan category saw a 20.8% hike, with the ₹479 plan (56-day validity, 1.5GB/day) increasing to ₹579

Reasons for the tariff Hikes.

To increase ARPU: ARPU which is the Average revenue per user is very low in the Indian telecom industry in comparison to other countries. Operators want to be financially ahead and compete globally which can be possible only by higher ARPU. 

Jios ARPU is 181.70₹, Airtels’ ARPU is 209₹, Vodaphone Idea’s ARPU is 146₹. To create a financially sustainable model and to compete globally average ARPU should be 300₹. Behind sustainable ARPU tariff hike is the main cause. 

Regain 5G investment:

All the Indian telecom companies have made significant investments in 5G technology. This tariff hike is also being considered to regain the investment back. All the Indian telecom companies want to insecure profitability in the telecom spectrum. 

Monetizing 5G investment

All Indian telecom companies want to monetize 5G technology higher than 4G technology. 5G technology is at the beginner level in India. The company wants to take the first mover advantage by monetizing 5G technology at a higher level. A sudden tariff hike is one of the ways to achieve Higher and sustainable growth for telecom industry.

Impact on SMEs: 

This sudden price hike can also affect SMEs(Small and medium-sized enterprises). This sudden tariff hike is also going to increase monthly telecom expenses. This tariff hike can slow down the digital transformation of the SMEs. 

Impact on the education sector:

The education sector could also be affected badly due to the Indian telecom sector price hike. Most small-town students rely on the Internet for their education. The cost of online education can increase and the affordability of students can be a big question. Price increases can also slow down the digital adaptation of education.

Conclusion

everything comes with two sides positive and negative. A sudden tariff hike can be positive for telecom companies but for Indian users, it’s bad news. To mitigate the bad effect small telecom players can play an important role. Small telecom players can provide the data at low rates to grab the market. This may give them additional customers. The government can also intervene and regulate these price hikes. 

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