Jio joins Bharti Airtel and Vodafone Idea, goes for 20% hike in tariffs

The tariff hikes, which come two months after the telecom reforms package, are being seen as important steps towards improving the financial sustainability of the sector
India’s largest mobile service operator, Reliance Jio, hiked its rates by 20 per cent on Sunday, joining industry rivals Bharti Airtel and Vodafone Idea (Vi) which went for a price revision earlier last week. Jio’s new rates will come into effect from December 1.

In a press release, the telco announced new unlimited plans. “Upholding the promise of providing the best quality service at the lowest price globally, Jio customers will continue to be the biggest beneficiaries,” it said.

The move will impact tariffs in all the existing slaps (Rs 75-2,399). While Airtel and Vi went for a 25 per cent rise in their entry level slabs, Jio hiked the rate in this segment by around 21 per cent.

Though companies, especially Airtel and Vi, had long been clamouring for a price revision, they were reluctant to take the first step for the fear of losing customers. Airtel bit the bullet last Monday, and Vi quickly followed suit.

The tariff hikes, which come two months after the telecom reforms package, are being seen as important steps towards improving the financial sustainability of the sector. These companies have indicated that the average revenue per user (ARPU) needs to go up to Rs 200 initially and then to Rs 300 to improve their financial health.

Airtel currently has the highest ARPU among the telecom companies. In the second quarter of FY22, it reported an ARPU of Rs 153. Jio and Vi reported ARPUs of Rs 143.6 and Rs 109, respectively.

Analysts had guided for a tariff revision from Jio after competitors decided to go for a hike. “In our view, not raising tariffs will be an opportunity loss for Jio, as it may find it difficult to gain 20 per cent upfront incremental revenues by attracting price-sensitive subscribers, presumably at the lower end from Bharti and Vi. The quantum of the hike from Jio will be a key factor to watch out for, although we expect it to maintain a similar level of discount to the peers as previously in order to maintain its value proposition for customers,” Kotak Institutional Equities said in a report last Thursday.

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