Airtel, Vodafone Idea set to raise prices by close to 30% in bid to improve ARPU

Millions of mobile phone users in the country will be spending more on the services – some say by up to 30% – over the next six months or so as and are tweaking their tariff offers.

Airtel on Wednesday removed its entry level Rs 49 plan for pre-paid users, making its entry level plan 60% dearer at Rs 79.

As per industry executives, Vodafone Idea (Vi) has made similar moves in a few circles and will expand it pan-India soon in a bid to push entry level users to higher-paying plans – a much-needed move for the financially struggling telco. Pre-paid users make up well over 90% of the industry’s subscriber base.

The latest moves follow Airtel’s decision last week to increase the entry-level post-paid plan for its enterprise customers and tweak offers for its retail users. Vodafone Idea followed soon after, reducing data benefits under its ‘Business Plus’ postpaid plans for its corporate customers.

Both telcos, especially Vodafone Idea, have been stressing on the need to raise tariffs and average revenue per user (ARPU) to improve the health of the sector, but have been reluctant to make the first move because Reliance Jio has been looking to rapidly add users even at the cost of ARPU growth, analysts said.

Cash-strapped Vodafone Idea especially needs immediate tariff hikes to improve its cash generation as it faces over Rs 22,000 crore in dues from December 2021 to April 2022, they said.

Shares of Airtel closed at Rs 567.90, up by 5.08% on the BSE on Wednesday and that of Vi closed at Rs 8.37, down by 0.48%.

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“The company’s prepaid packs will now start from the Rs 79 Smart Recharge and offer up to four times more outgoing minutes of usage to customers along with double data,'” Airtel said in a statement on Wednesday.

A person familiar with the matter said Airtel is set to make changes to its pre-paid tariff plans across price levels.

Vi, in some markets like Maharashtra and Gujarat, has already made its Rs 49 plan for 14 days instead of earlier 28 days. In these circles, the customer will have to pay Rs 79 for a 28-day period plan. Now the changes are likely to be rolled out across circles, an industry executive said.

Customers of JioPhones have a starting tariff of Rs 39 for a 14-day plan and Rs 75 for a 28-day plan. Non-JioPhone users can avail services starting at Rs 98 for a 14-day plan) and Rs 129 for 28 days.

“Tariffs will go up by 30-35% now that the economy is improving and the impact of Covid-19 second wave is easing,” said Rohan Dhamija, partner and head of India and the Middle East, at Analysys Mason.



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