Tariff Hikes by Airtel, Jio and Vi Would Likely be Delayed Until Elections

Bharti Airtel, Vodafone Idea (Vi) and Reliance Jio are likely going to delay the tariff hikes until the next general elections. The next general election would take place in 2024. Telcos have blamed the delay in tariff hikes in the past as the source of their problems. Thus, with the advent of the 5G era and increased investments, it was expected that the telcos would increase tariffs in the near future. But it is also worth considering that because the general elections are now just a year away, the telcos would likely refrain from hiking tariffs in a full-scale manner.

Instead, the telcos might keep making small adjustments to indirectly hike tariffs. Airtel did this by removing the Rs 99 plan from all circles, and now the new base plan for low-income users to recharge with is the Rs 155 option. The last tariff hike happened at the end of 2021, and if the next one happens in 2024, then it would have been more than two years since the previous one.

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Delayed tariff hikes would hurt the potential of the Indian telcos to grow their revenues and their average revenue per user (ARPU) figure. Vodafone Idea is in desperate need of a tariff hike as the telco’s losses are widening every quarter that goes by. Vi also needs tariff hikes to be able to raise funds from external investors. The investors are worried about giving Vi their money because the tariffs in the Indian telecom industry are unsustainable.

Also, the telecom operators are not monetising 5G yet. Since they are offering 5G at the cost of 4G, their operations have become more expensive. Further, over the next few years, they are going to invest more and more into the building of 5G networks. Thus, they are in a desperate need of the tariff hikes so that they can improve their revenue margins.