Another Tariff Hike Will Set Back the Slowly Recovering Vodafone Idea

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Vodafone Idea Tariff Hike Impact

Telecom operator Vodafone Idea is recovering slowly after losing more than 150 million subscribers over the last two years. Vi has been struggling in the industry ever since Reliance Jio entered the Indian telecom market. It has been a tough ride for Vodafone Idea, to say the least, but the best part is the telecom operator is bouncing back strongly. After announcing the new brand identity in 2020, we are looking at a completely different Vodafone Idea. The telco is coming up with new offers now and then; For example, it has a slew of unique offers such as unlimited night data, weekend data rollover facility, extra data benefit on select plans and so on. Yesterday's Trai monthly subscription data for January 2021 showed that Vi has finally managed to add 1.7 million new subscribers. There's no doubt that Vi is getting back on track, but a tariff hike will set back the company by a huge margin.

Why It Is Good for Vi to Avoid Hiking Tariff Prices

We saw telecom operators hiking tariff prices by up to 40% in December 2019. A 1.4GB data per day plan with 84 days used to cost Rs 399 in the past, but the price has been hiked to Rs 599 now. If we consider another tariff hike, the price of the same plan could go to Rs 799. While a tariff hike is good for telecom operators, it may hurt subscriber additions, an area where Vodafone Idea is struggling to keep up with the competition.

Over the last few months, Vi was heavily rumoured to hike tariffs by the end of Q4 FY21, but a recent report said the telco is going against the tariff hike for now. Staying away from tariff hike will be a good option for Vodafone Idea in the current scenario. The telco's overall subscriber base at the end of January 2021 is just over 285 million. Vi should look at taking the subscriber base past 300 million alongside increasing the ARPU. For the unaware, Vi's ARPU is also the lowest amongst private telcos sitting at just Rs 121. In my opinion, Vi should not increase tariff prices till it reaches an ARPU of Rs 150.

Even with affordable prepaid plans in the industry, Reliance Jio isn't doing any better in terms of subscriber additions. But Bharti Airtel is doing an exceptional job at the box office because of the superior network service it delivers.

Vodafone Idea is now looking at a tariff hike by the end of Q1 FY22, which is just three months away. The telco should go with this decision considering the results it achieves in the last quarter of FY21, ending on March 31, 2021. What's your view on Vodafone Idea hiking tariff prices? Let us know by commenting below.

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Chakri is a go-to guy for your next smartphone recommendation. Back in his engineering days, he used to play with smartphones by installing custom ROMs and that passion got him into the tech industry. He still goes nuts about a smartphone knocking his door for review. Currently managing everything at Telecom Talk, Chakri is trying to master PUBG Mobile in his free time.

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