The moment when prepaid plans become expensive is nearby. Telecom operators have clearly indicated that they won’t hesitate to raise tariffs to improve their average revenue per user (ARPU) so that their marginal profits improve. For Airtel and Jio, it’s a question of improving profit margins, while for Vodafone Idea (Vi) and Bharat Sanchar Nigam Limited (BSNL), it is about survival. According to an IANS report, Goldman Sachs said that Bharti Airtel is not afraid of making the first move to increase tariffs. This move should motivate Vodafone Idea to go for tariff hikes as well, which is looking to improve its ARPU and overall revenues substantially.
Vodafone Idea Likely to Follow Bharti Airtel’s Tariff Hike Move
Vodafone Idea is very likely to follow Bharti Airtel in increasing tariffs. Both the telcos will benefit majorly if their ARPU goes up. As per Goldman Sachs, after the discontinuation of the Rs 49 plan from all the 22 telecom circles of India, 55 million customers of the telco who are using the concerned plan will have to shift to the Rs 79 plan, which will result in an immediate monthly ARPU jump of Rs 5 for Airtel.
One of the key things worth mentioning here is that Airtel is not afraid of customer churn. The telco’s recent move of discontinuation of the Rs 49 plan suggests so. Bharti Airtel is known for being the ‘premium’ telecom brand in India, and the telco has suggested many a time that it only focuses on adding more high ARPU customers.
The overall industry price hikes are around the corner, and with 5G on the way, the telcos will have to incur more costs on purchasing new spectrum and deploying new 5G solutions and equipment. Vodafone Idea would be very happy to see Airtel moving ahead with the tariff hikes first because the cash-strapped telco can’t do it on its own as it would only result in a higher subscriber churn.