Airtel Announces Tariff Hike Following Reliance Jio’s Lead
New Delhi, 29th June 2024: Following Reliance Jio’s recent tariff hike announcement, Bharti Airtel has also raised the prices of its mobile plans by 11% to 21%, effective from July 3, 2024. This move comes after a period of two and a half years of stable pricing in the telecom industry.
The tariff increase primarily affects Airtel’s unlimited voice plans. The company’s Rs 179 plan will now cost Rs 199, while the Rs 455 plan will see a significant increase to Rs 599. Additionally, the Rs 1,799 plan will now be priced at Rs 1,999.
This change mirrors Jio’s recent adjustments, which not only made their plans more expensive but also saw the discontinuation of certain plans altogether.
In a regulatory filing, Airtel emphasized the need for a financially sustainable business model in the telecom sector. They highlighted that the price hikes are modest, amounting to less than Rs 0.70 per day on entry-level plans, in an effort to minimize the impact on budget-conscious consumers.
Airtel’s long-term goal is to achieve an average revenue per user (ARPU) of over Rs 300, aligning with industry experts’ expectations.
The announcement was well-received by investors, with Bharti Airtel’s share price rising by 1.24% in early trading following the news. Analysts at JM Financial predict that the recent hike will lead to modest upgrades in ARPU and EBITDA estimates for FY2025 and FY2026, assuming no further price adjustments before late FY2026 or early 2027.
They project that the industry ARPU will grow steadily at a compound annual growth rate (CAGR) of 10-12% over the next three to four years, reaching Rs 300.
The recent wave of tariff hikes by major telecom operators, including Reliance Jio and Airtel, indicates a shift towards a more sustainable pricing model in the Indian telecom industry. This trend suggests a focus on balancing financial sustainability with consumer affordability, aiming to enhance service quality while ensuring long-term viability.
These adjustments mark a significant development in the telecom sector, reflecting the ongoing efforts to adapt to market demands and economic challenges.
