Jio hikes tariffs by up to 39%; rates still 15-20% below rivals Airtel and Vodafone Idea

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Published: December 5, 2019 3:06:59 AM

In the case of Bharti and Vodafone, the new revised tariffs have come into effect from December 3, while Reliance Jio had said that its revised tariffs will come into effect from December 6.

Bharti Airtel, Vodafone Idea, and Reliance Jio, on Sunday announced new, higher tariff plans. In the case of Bharti and Vodafone, the new revised tariffs have come into effect from December 3, while Reliance Jio had said that its revised tariffs will come into effect from December 6.

Reliance Jio on Wednesday announced new tariff plans, which are about 15-20% cheaper compared to the revised tariffs of Vodafone Idea and Bharti Airtel. Jio’s new tariffs imply that the company has hiked prices to the tune of 39%.

Jio is offering plans with 28 days validity that come with 2GB data at Rs 129, which is 15% cheaper than what Vodafone Idea and Bharti Airtel are offering. Similarly, Jio is also offering 1.5GB data per day with 28 days validity at Rs 199, which is 20% cheaper than its competitors. For a similar plan, Bharti is charging Rs 248 and Vodafone Idea Rs 249.

Bharti Airtel, Vodafone Idea, and Reliance Jio, on Sunday announced new, higher tariff plans. In the case of Bharti and Vodafone, the new revised tariffs have come into effect from December 3, while Reliance Jio had said that its revised tariffs will come into effect from December 6.

Jio had said that it proposes to hike tariffs by up to 40% but will also offer 300% more benefits. The most affordable plan of Rs 98 with validity of 28 days is now 31% more expensive as it costs Rs 129. However, while the earlier plan did not give inter-connect usage (IUC) minutes, the new plan will offer 1,000 IUC minutes. Also, prices have gone up in another 28 day plan of Rs 149, which is now up 33% to Rs 199.

Earlier, the plan did not offer any IUC minutes but the new Rs 199 plan comes with 1,000 IUC minutes. IUC is the termination rate and Reliance Jio was the first operator to have introduced the practice of charging the termination rate for calls made to other networks, called off-net calls in industry parlance. This in effect, signifies that operators have moved towards recognising termination rate as a kind of floor price.

Meanwhile, the company said that its Rs 555 plan continues to be for 84 days and gives 1.5GB per day of data and 3,000 minutes of IUC calls against 2GB of per day data earlier in the same plan. In another plan of Rs 444, that offered 1,000 IUC minutes earlier, will now offer 2,000 IUC minutes and its validity has been reduced from 84 days to 56 days.

The tariff hikes for Bharti and Vodafone were in the range of 15-50%. The two companies broadly kept the daily data limits and other benefits like OTT packs same as before. A major change in their 4G packs was that on free voice calls a fair usage policy (FUP) has been introduced after which calls made to another networks will be charged at 6 paise per minute.

Before Jio announced its plans, analysts had said that Jio’s plans would be at a discount to Bharti and Vodafone Idea. “Even with this kind of price increase, its most popular 84-day plan will be at an 11% discount to its peers. Therefore, Jio continues to price its plans at discount to peers. Our model already builds in Jio Arpu going from Rs 120 in 2Q20 to Rs 150 after price increase (average price increase of 25%),” said analysts at Credit Suisse. Bank of America and Merrill Lynch had believed that even after these hikes, Jio will continue to be 15-20% cheaper than the incumbent operators.

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