Stress response: Airtel, Vodafone Idea, Jio raise prepaid tariffs by up to 50%

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Published: December 2, 2019 12:37:43 AM

Daily data limits, OTT packs for Bharti & Voda Idea unchanged, hikes effective Dec 3; Jio tariffs up 40% from Dec 6.

In the case of Vodafone Idea, the same has been repriced from Rs 35 to Rs 49.

Bharti Airtel, Vodafone Idea and Reliance Jio on Sunday announced the anticipated hikes in mobile and data tariffs. The hikes for Bharti and Vodafone are in the range of 15-50% across categories and are only in the prepaid segment, which accounts for 95% of the subscribers.

Jio, which did not disclose its revised tariffs, unlike the other two operators, merely said its new plans will be 40% higher and will provide 300% more benefits. Here too, the hike is only for prepaid users.

In the case of Bharti and Vodafone, the revised tariffs will come into effect from December 3, while Reliance Jio said its new tariffs will come into effect from December 6. Broadly, the daily data limits and other benefits like OTT packs remain the same in the case of Bharti and Vodafone Idea. A major change for 4G packs is 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. This 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.

The pattern of tariff hike is such that it doesn’t tinker with the voice-data combo packs, but just increases the monthly/ validity charge. For instance, in the case of Bharti Airtel, the Rs 129 pack will now be charged at Rs 148, Rs 249 pack has been priced at Rs 298 and Rs 499 pack’s new charge is Rs 698.

Similarly, for Vodafone Idea, the earlier Rs 199 pack has now been priced at Rs 249, and Rs 459 pack has been priced at Rs 599.

In the case of Bharti, for 2G subscribers, the minimum Rs 35 pack has been repriced at Rs 49. In the case of Vodafone Idea, the same has been repriced from Rs 35 to Rs 49.

The revision of only prepaid tariffs makes sense because 95% subscribers are here and average realisation per user is low. By increasing the tariffs here, the Arpu increases. Roughly, industry Arpu for postpaid users is around Rs 220 per month.

However, the monthly blended Arpu in the case of Bharti Airtel during July-September stood at Rs 128.
Broadly, analysts had estimated that an Arpu increase of 10% by Bharti and Vodafone Idea will result in 10% wireless revenue growth and 20% wireless Ebitda growth based on Q2FY20 financials.

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