ISPs Reliance Jio and Bharti Airtel might surprise the market and go for tariff hikes earlier than expected.
Vodafone Idea (Vi) has been in a tough position financially for a long-time now. The third-largest telecom operator of the country is waiting for its rivals Jio and Airtel to increase tariffs so that it can do so as well. Until now, the analysts have believed that the top two operators of the country won’t push for tariff hikes, and because of this, Vi may also have to delay their move.
But Jio and Airtel might surprise the market and go for their tariff hikes earlier than expected. While there were not a lot of issues in regards to the overall revenues, both the operators saw their average revenue per user (ARPU) degrading quite significantly.
Clandestine Efforts of Tariff Hikes to Increase ARPU
Bharti Airtel and Reliance Jio might go for Tariff hikes sooner than expected. The motive behind this effort is to increase their overall ARPU. It is still an assumption and not a direct statement coming from the companies.
Airtel’s ARPU fell to INR 145 in the last quarter as compared to INR 166 in the previous quarter. At the same time, Reliance Jio’s ARPU fell from INR 151 in the third quarter to INR 138.2 in the last quarter of Financial Year 2021.
Both the telecommunication ISPs are facing a dip in ARPU because of several factors, out of which one of the prominent ones is the removal of interconnect usage charges (IUC) from January 1, 2021.
Vodafone Idea (Vi) on complete approval of Jio and Airtel’s Plans on Tariff hikes
Vi will be the happiest if the other two telcos go for tariff hikes sooner than expected. Jio’s ARPU is not expected to boost significantly, since the company is expected to add a large amount of low-ARPU customers (JioPhone users).
Vi needs to improve its ARPU desperately to see a little curb in their financials. The telco has been unable to raise funds because of a weak reputation in the market. However, things seem to be going Vi’s way since the telco has not only added customers recently but also improvising its 4G network capacity throughout India.
Jio and Airtel didn’t go for tariff hikes until now to not upset their subscriber addition date. if the telcos increase tariffs, it would further create problems for them to attract legacy network users. The tariff hikes just might be back on the court of the telecom operators. The companies are yet to make any official statement on the matter as mentioned before. Although the tariff hikes can be expected to come by the September quarter.
Another small little detail to know about is that Airtel has already said that while it would increase tariffs, it wouldn’t be the first operator to do so.