Vodafone Idea (Vi) has been in a tough position financially for a long-time now. The third-largest telecom operator of the country is waiting for its rivals Reliance Jio and Bharti Airtel to increase tariffs so that it can do so as well. Until now, the analysts have believed that the top two operators of the country won’t push for tariff hikes, and because of this, Vi will also have to delay its move.
But Jio and Airtel might surprise the market and go for tariff hikes earlier than expected. If you are wondering why that is, take a look at the Q4 results of both the telcos. While there were not a lot of issues in regards to the overall revenues, both the operators saw their average revenue per user (ARPU) falling quite significantly.
Airtel, Jio Might Introduce Tariff Hikes to Increase ARPU
Bharti Airtel and Reliance Jio might just go for tariff hikes sooner than expected to improve their falling ARPU situation. Note that this is an assumption and is not a statement coming from the companies themselves.
Airtel’s ARPU fell to Rs 145 in the last quarter as compared to Rs 166 in the previous quarter. At the same time, Reliance Jio’s ARPU fell from Rs 151 in the third quarter to Rs 138.2 in the last quarter of FY21.
Both the telcos are facing a dip in ARPU because of several factors, out of which one of the prominent ones is the removal of Interconnect Usage Charges (IUC) from January 1, 2021.
Vodafone Idea Will Be Happy if Airtel, Jio Go for Tariff Hikes
Vi will be the happiest if the other two telcos go for tariff hikes sooner than expected. We don’t expect Jio’s ARPU to boost significantly, given the telco is expected to add a ton of low-ARPU customers (JioPhone users).
Vi needs to improve its ARPU desperately to see some respite in its financials. The telco has been unable to raise funds because of a weak reputation in the market. However, things seem to be going Vi’s way since the telco not only added customers recently but is also improving its 4G network capacity throughout India.
Jio and Airtel didn’t go for tariff hikes until now to not upset their subscriber addition rate. If the telcos increase tariffs, it would further create problems for them to attract legacy network users. The tariff hikes just might be back on the cards of the telecom operators. The companies are yet to make any official statement on the matter, but we expect the tariff hikes to come by the September quarter.
It is worth noting that Airtel has already said that while it would increase tariffs, it wouldn’t be the first operator to do so.
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