India is soon going to witness a massive tariff hike in the prepaid segment. The telcos have mostly gone ahead with tariff hikes around November or December period in the last few years. We are now close to November ending, and Airtel has already implemented a small-scale tariff hike in two circles, namely, Haryana and Odisha, where the Rs 99 plan has been removed as the lowest-recharge plan. Now, the new lowest recharge plan is Rs 155. This is something that's not going to sit well with a large section of the customers, but they can't really do anything about it if all the telcos move ahead with a similar kind of tariff hike. ICICI Securities estimated it to be a 57% tariff hike for customers who were on the Rs 99 plan.
Higher Tier Plans Unlikely to See Such High Percentage Tariff Hikes
It is very unlikely that users on the higher-tier prepaid plans would see such a high percentage hike in tariffs. Like last time, the higher-tier plans could see a 20% to 25% hike (assumption based on the last tariff hike). Prepaid tariff hikes in the country would mean that the average revenue per user (ARPU) figure of the telcos, along with their overall revenues, would go up significantly. This is something that Airtel and Vodafone Idea (Vi) have talked about a lot.
On November 24, 2022, we published a piece on how Airtel has given an offer to Jio and Vi that they can't refuse. We were simply talking about the opportunities for the other players to hike tariffs since Airtel has already shown intent. It is very likely that tariff hikes will happen in the near future. So, what will be one of its most major impacts on the Indian telecom landscape?
Indians Would Shed Secondary SIM Cards
In the near future, Indians are likely going to leave their secondary SIM cards as the cost to keep them active would go way up. For example, if someone was spending Rs 99 already on keeping their secondary Airtel SIM active, now they would have to spend Rs 155, and it wouldn't even be the best validity plan.
When the prepaid tariff hikes were implemented last time, it sent the industry into a SIM consolidation phase where the telcos didn't show much subscriber gains. This time too, the same is expected to happen. Most consumers who are barely able to keep their secondary SIM cards active right now would stop recharging them. Will India go back to the phase of users majorly owning single SIM cards? Well, it very much looks like it. But then again, consumers now have a certain appetite for two SIM cards. Who knows, the consumers might accept the tariff hike they did last time.