Bharti Airtel, India’s second-biggest phone carrier, said it would raise prices of its mobile plans. This follows a similar move by Reliance Jio, the market leader.

A girl checks her mobile phone as she walks past the Bharti Airtel office building in Gurugram, on the outskirts of New Delhi (Reuters)

Airtel’s tariff hike across various plans ranges from 10-21%, and will become effective from July 3.

What are the new prices for Airtel plans?

Among the unlimited voice plans, Airtel has raised tariffs in the ballpark range of about 11 per cent, and accordingly rates are revised from 179 to 199; from 455 to 509; and from 1,799 to 1,999.

In the daily data plan category, the 479 plan with a 56-day validity, giving 1.5GB/day, has been increased to 579, a 20.8% hike.

The price of the 1GB/day plan with 28-day validity has been increased from 265 to 299, whereas the 1.5GB/day offering has increased from 299 to 349.

The longer 84-day validity plans subscribers will have to spend 140 more depending on the offering. Here, the 1.5GB/day offering has been raised from 719 to 859, while the 2GB/day offering has been raised from 839 to 979.

The data add-ons too have increased. For the 1GB and one day validity, the rates have been increased from 19 to 22, and the 2GB plan will see the prices move from 29 to 33. Meanwhile, the 4GB add-on, with a 65-day validity has been hiked from 65 to 77.

Post paid rates will see a 10-205 increase, translating to 50-200 hike in absolute terms depending on number of connections and benefits dished out.

How do Airtel prices compare to Jio?

The price hike on an average is an increase of less than 70 paise per day for Airtel’s base plans, the company said in its stock exchange statement.

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Airtel’s price hikes come after Jio, India’s largest telecom operator, announced a 12-27% hike in mobile tariffs on Thursday. Market watchers expect a similar price hike move from Vodafone Idea soon, PTI wrote.

Despite this, most of the Airtel mobile plans will still cost more than that of Reliance Jio, according to the PTI report.

Why are telecom operators hiking prices?

Airtel has been a strong advocate of the need to hike tariffs, and has repeatedly flagged the ‘absurdly low’ levels of rates in India compared to other parts of the world.

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For example, America’s top wireless carrier, AT&T’s average revenue per user is $55, while it is as low as $2 in India, according to a Bloomberg report which quoted Niket Shah, chief investment officer at Motilal Oswal Asset Management. Airtel said in its statement on Friday that the measure needs to be more than 300 rupees ($3.6) to actually lead to good financial health of telecom operators in India.

Why was there a price war among Indian telecom operators?

The price hikes reflect how India’s phone carriers are recovering from a bruising price war that started after Asia’s current richest man, Mukesh Ambani entered the sector in 2016, Bloomberg wrote, adding that the latest hikes are aimed to increase revenue, and recoup the investments made so far in 5G networks.

The price war in question was started with Mukesh Ambani’s Jio disrupting the market in 2016 with cheap 4G data services, reshaping the sector into a near-duopoly dominated by Jio and Airtel. Revenues of all telecom companies plunged, burdening them with massive debts.

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The price hikes also come after the latest telecom airwave auction that saw just a fraction of sales being done compared to last time, as India’s top 3 telecom operators restricted their capital spending.

The attention is now on India’s third biggest operator, Vodafone Idea, which has seen financial losses and an eroding subscriber base, according to the Bloomberg report.