Get ready to shell out more for your mobile phone plans. Leading telecom providers Reliance Jio and Bharti Airtel have announced significant tariff hikes, a move expected to increase annual consumer spending on telecom services by a whopping Rs 47,500 crore, according to The Economic Times.
The price increases, attributed to the rollout of 5G services and a push for higher Average Revenue Per User (ARPU), are impacting both new and existing customers.
“Annual customer outgo on telecom services could potentially increase by Rs 47,500 crore after the tariff hikes, and with Jio restricting unlimited 5G data allowance to 2GB/day and above plans versus Rs 239 for 1.5GB/day and above plans earlier,” said Kotak Institutional Equities in a research note.
Jio users looking to access the faster speeds of 5G will now face a 46% increase in minimum recharge costs, while Airtel users are facing a steeper 71% hike.
Jio’s entry-level 5G plan now starts at Rs 349 for 2GB/day, up from Rs 239 for 1.5GB/day. Airtel’s revised entry-level 5G plan comes in at Rs 409 for 2.5GB/day, replacing the previous Rs 239 plan offering 1.5GB/day.
These changes, analysts say, are a clear move to monetise the rollout of 5G.
“Jio restricting unlimited 5G data allowance to 2GB/day and above plans…[is] a move to monetise the rollout of 5G,” added Kotak Institutional Equities.
The impact of these price hikes is expected to be substantial.
Goldman Sachs estimates that Jio’s tariff revisions could result in a 17% increase in ARPU. Citi Research predicts a similar trend for Airtel, projecting ARPU to rise to Rs 235/270/305 by FY25/26/27, up from Rs 209 in Q4FY24.
The price hikes aren’t limited to 5G users. Both Jio and Airtel have implemented increases across their prepaid and postpaid platforms. Even Vodafone Idea (Vi), which is yet to launch 5G services, has joined the wave, raising tariffs by 10% to 23%.
These developments have sparked conversations about aligning India’s telecom pricing with global standards.
“India’s telecom pricing structure [needs] to align with global practices, where users pay based on data consumption levels rather than a uniform rate,” stated Bharti Airtel’s Gopal Vittal and Vi’s Akshaya Moondra.
Despite the substantial price increases, analysts remain optimistic about the future of the Indian telecom market.
Goldman Sachs anticipates a robust 15-20% compound annual revenue growth rate (CAGR) for both Jio and Airtel over the next three years, fuelled by further tariff revisions and increasing data consumption.
Nomura Research echoed this sentiment, highlighting the “robust competitive structure” of the Indian telecom market and forecasting improved free cash flow generation for industry leaders.
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