Vodafone Idea is facing a difficult choice as rivals Reliance Jio and Bharti Airtel step up efforts to raise revenue from existing customers: it needs higher tariffs to improve its average revenue per user (Arpu), but a sharp increase could put its nascent subscriber recovery at risk, analysts said.
Jio has reintroduced its Jio Prime membership, offering subscribers tariff protection until September 2027, while Airtel has been pushing customers towards higher-value plans as part of its premiumisation strategy. For Vi, both developments add pressure to improve monetisation while limiting the risk of losing price-sensitive customers.
The Jio Prime offer could also be a precursor to a tariff increase. “The price protection guarantee till September 2027 in a way signals that a tariff hike is likely in the next six months (Rs 46/month Arpu hike based on Rs 50/cycle increase) if the Jio Prime member has to make the most out of the membership,” analysts at Motilal Oswal said. The membership comes at an upfront cost of Rs 300.
If the hike is delayed beyond March 2027, the quantum could be materially higher, the brokerage said. It expects Prime to support customer retention and give Jio an Arpu boost even without an immediate tariff increase.
Airtel, meanwhile, has already discontinued its Rs 299 prepaid plan, pushing customers towards higher-priced offerings. The company has said premiumisation is central to its strategy of increasing Arpu.
The challenge is more acute for Vi because it has only recently begun reversing years of subscriber losses. Its subscriber base increased to 193.1 million in Q1FY27 from 192.8 million in the previous quarter, marking its first quarter of net additions since the merger of Vodafone India and Idea Cellular. Its 4G/5G subscriber base also rose to 130.1 million from 128.9 million.
At the same time, Vi has considerable room to improve monetisation. Its mobile Arpu rose to Rs 195 in Q1FY27 from Rs 190 in the previous quarter, but remained well below Airtel’s Rs 264. Jio does not disclose its mobile and homes Arpu separately, but analysts estimate its mobile Arpu at Rs 180-185. Jio, however, has a much larger subscriber base of 533 million.
The industry is also approaching the next tariff cycle differently this time. Over the past six years, tariff increases were typically announced after a broad consensus among operators on the timing and quantum of the hike. That may not be the case now, analysts at Avendus said.
“Jio chose to come up with its own construct resulting in just 5-7% growth instead of following Bharti Airtel’s footsteps to take 16% hike in entry level plan,” the analysts said, suggesting there is no industry consensus this time.
Vodafone Idea Chairman Kumar Mangalam Birla said at the company’s annual general meeting last week that FY27 would be a year of execution and delivery, with around Rs 9,000 crore of capex orders already placed. He also said a revision in the industry’s tariff structure was essential to ensure operational stability.