NEW DELHI: A day after Reliance Jio‘s announcement, Bharti Airtel and Vodafone Idea joined the market leader and announced tariff hikes by over 20% each as they sought to improve bottom-lines hit by intense competition.
While Bharti Airtel raised tariffs by 10-21% across plans, Vodafone effected an increase of 13-27%. Ratings agency ICRA said tariff hikes could yield additional operating profits of around Rs 20,000 crore for the industry once they are fully absorbed.With improved financial metrics, the industry will have the headroom to undertake deleveraging as well as fund capex for the technology upgrade, and network expansion, it said.
Jio’s price rise may boost its monthly average revenue per user (Arpu) by about 17% over the next year, Morgan Stanley estimated. The Mukesh Ambani outfit, which pushed tariffs in India to record low after it launched a free service on an extended trial run to add subscribers, reported Arpu of Rs 182 during Jan-March quarter.
Airtel, which had an ARPU of Rs 209 at the end of the last quarter, has argued that it should be earning around Rs 300 from each of its users. “We believe that this level of Arpu will enable the substantial investments required in network technology and spectrum and offer a modest return on capital,” Airtel said.