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Bharti Airtel and Vodafone Idea both hike prices, citing the need to increase ARPU

Two of the three major Indian mobile network operators have felt forced to increase the price of many of their tariffs so they can pay their bills.

Yesterday Bharti Airtel announced a bunch of tariffs would go up in price by 20% or so starting at the end of this week. It took just a day for Vodafone Idea to conclude that’s a great idea and announce similar hikes that come into effect a day sooner – i.e. this Thursday. At time of writing there didn’t seem to be any equivalent move from Reliance Jio.

“Airtel has always maintained that the mobile ARPU needs to be at Rs 200 and ultimately at Rs 300, so as to provide a reasonable return on capital that allows for a financially healthy business model,” said the first announcement. “We also believe that this level of ARPU will enable the substantial investments required in networks and spectrum. Even more important, this will give Airtel the elbow room to roll out 5G in India.”

“Vodafone Idea, India’s leading telecom service provider, today announced the launch of its new tariff plans for prepaid users in India,” said the second. “The new plans will be available starting 25th November 2021. The new plans will start the process of ARPU improvement and help address the financial stress faced by the industry.”

So, while they both made reference to ARPU, which is unusual in an operator press release, they also skirted around the elephant in the room, which is the fines and historical fees the two operators are being forced to pay the Indian government. The VI one did refer to ‘financial stress faced by the industry’, but the fact is that stress is unevenly distributed.

Not only does Jio have to pay the government a small fraction of the amount demanded of its competitors, but it has been a major cause of the ARPU stress they’re under by giving away minutes and data in it highly successful bid to take market share from them.

It’s a sign of their desperation that these two Indian operators should decide to unilaterally hike their prices, thus handing Jio a further competitive advantage. Presumably Jio won’t hesitate to lure cash-strapped Airtel and VI customers with contrastingly cut-price deals, making it distinctly possible its competitors will be worse off as a result of this move. Maybe the whole thing is designed to demonstrate to the Indian government what dire straits they are in but sympathy has been in short supply to date.


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