In a move to boost average revenue per user (ARPU) amidst substantial investments in 5G services, Reliance Jio and Bharti Airtel have announced major tariff hikes. This marks the first significant rate increase by a telecom operator since 2021.
Starting July 3, Reliance Jio's new rates will come into effect, impacting over 472 million users. The price revisions include:
Rs 155 plan: Increased to Rs 189.
Rs 239 monthly plan: Offering 1.5 GB data per day, revised to Rs 299 (a 25% increase).
Annual package: Raised from Rs 2,999 to Rs 3,599.
Smallest increase: Rs 34 for the Rs 155 plan with 28 days validity.
After the price hike, unlimited 5G data will only be available with plans offering 2GB/day data or above.
Following Jio's lead, Airtel has also revised tariffs for both prepaid and postpaid plans:
Rs 179 monthly plan: Increased to Rs 199, offering 2GB data per day, unlimited calling, and 100 SMS per day.
Rs 1,799 annual plan: Now costs Rs 1,999.
Daily data add-on plans: Start at Rs 22, up from Rs 19.
Postpaid plans: Range from Rs 449 to Rs 1,199, with daily data plans starting at Rs 265.
Airtel Prepaid Plans
Airtel Postpaid Plans
Experts anticipated the tariff hikes following the spectrum auction, as telcos aim to monetize their investments. Jio's ARPU showed minimal growth, from Rs 178.80 in fiscal 2023 to Rs 181.70 in fiscal 2024. Both Jio and Airtel have invested over Rs 2 lakh crore in 5G rollouts without immediate returns. This is the first significant tariff increase since November 2021, when rates were raised by 20-25%.
Brokerage firm CLSA suggests that Jio, Airtel, and Vodafone Idea need at least a 20% rate hike to reach a sectoral ARPU of Rs 200-217 by FY25-26. In May, Airtel's Managing Director, Gopal Vittal, emphasized the necessity for substantial tariff increases, citing the low return on capital employed (RoCE) at 9.5%. He noted, "While tariff hikes would invariably lead to some SIM consolidation, the upside benefits are far greater."
A report from BofA Securities indicates that 36% of Jio and Airtel users are prepared to accept a 20-25% tariff hike post-elections. The telecom sector continues to adjust pricing strategies to enhance revenue in a competitive market.
As the telecom giants implement these new tariff structures, consumers will need to navigate the increased costs while enjoying the advancements brought by 5G technology.
