Reliance Jio Airtel and Vodafone Idea plan to increase tariff plan prices by 15 to 20 percent in the new year.
Jio, Airtel, and Vodafone Idea had increased the price of the tariff plan in the last year i.e. 2019. It is now reported that the country’s major telecom companies can once again increase the tariff rate by 20 percent. However, official information about the tariff hike has not been shared by the three companies yet.
According to an online report, Vodafone Idea and Airtel may hike tariff plan prices by 15 to 20 percent later this year or early in the new year. At the same time, telecom company Reliance Jio can also take advantage of this opportunity and make their tariff plans expensive. For your information, let us know that the company had made almost all its recharge plans expensive in 2019 and limited unlimited calling to other networks.
“The company is likely to increase tariffs even as telcos wait for the regulator to fix floor prices,” said one person aware of the matter to ET Telecom. After the recent quarter results, several analysts also predicted the tariff hike from Vi is inevitable considering the financial situation of the telco. To recall, Vodafone Idea was the first telecom operator to announce tariff hike in November last year. “Vi could hike rates as early as in December,” said another person to the publication.
Earlier, a report by another report revealed that Jio, Airtel and Vodafone-Idea had increased the price of tariff plan by 40 percent last year and now all three companies are planning to hike tariff again.
“Ongoing consultations around floor price (for data rates) doesn’t stop anyone from hiking tariffs, but the timing has to be right, but we can assure you that the tariff hike decision is not far away,” Takkar told analysts after the second-quarter results. Bharti Airtel CEO Gopal Vittal has said that while it will not be the first operator to raise prices, it will instantly follow its peers, as it also agrees that current rates are unsustainable.
However, it is still not clear if Jio will follow suit, given that its pace of user additions has slowed, a reason telcos have been pushing the telecom regulator to set a floor for data tariffs, the publication mentioned citing experts. In the July-September quarter, Jio added 7 million subscribers compared with Airtel’s 14 million. Vi lost 8 million users.
It’s a Catch-22 situation for Vi. Experts said it needs to raise rates urgently to help meet payment obligations including annual instalments towards its adjusted gross revenue (AGR) dues of over Rs 50,400 crore and invest in its 4G network to bridge the gap with rivals and retain subscribers. However, raising tariffs could trigger a further exodus of subscribers unless Airtel and Jio also increase rates. Goldman Sachs expects Jio to follow its rivals because its discount to their prices would still continue.
“The telco (Vi) would also need to raise rates to improve financials and drive confidence in potential investors,” an industry executive told the business daily, asking not to be identified. The telco is raising up to Rs 25,000 crore via a mix of debt and equity.
