Vodafone Idea Could Benefit Immensely from Airtel’s Recent Tariff Hike

Bharti Airtel has implemented a pretty major tariff hike. The base plan is now 57% more expensive than earlier. Indian consumers are price sensitive, and a large section of society lives off on minimum recharge plans. Thus, a super expensive base prepaid plan may mean that Airtel customers would look towards other operators for affordable options.

Highlights

  • Vodafone Idea (Vi), the third-largest telecom operator in India, is losing customers to its competitors pretty fast.
  • Vi has not been able to compete with Airtel and Jio because of capital issues.
  • Vodafone Idea can benefit at this juncture.

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Vodafone Idea

Vodafone Idea (Vi), the third-largest telecom operator in India, is losing customers to its competitors pretty fast. Vi has not been able to compete with Airtel and Jio because of capital issues. The ailing telco has not seen any success in raising funds from external investors yet. What's hurting Vi more is that the tariffs between all the operators are almost the same, and the Indian users are mainly prioritising the 4G network services of competitors. But a recent tariff hike move from Airtel can immensely help Vodafone Idea. For the unaware, Airtel has silently removed the base Rs 99 plan from Haryana (B Circle) and Odisha (C Circle).

Read This - Airtel Tariff Hike in Haryana and Odisha a Positive Move: ICICI Securities

Since the tariff hike is in two circles, it means that the telco is testing its effects of it. The base plan now from Airtel is the Rs 155 plan in these two circles. This means a major tariff hike for the consumers of these two circles. So how will this help Vodafone Idea? Let's see.

Price Sensitive Users May Move to Vi

Bharti Airtel has implemented a pretty major tariff hike. The base plan is now 57% more expensive than earlier. Indian consumers are price sensitive, and a large section of society lives off on minimum recharge plans. Thus, a super expensive base prepaid plan may mean that Airtel customers would look towards other operators for affordable options.

Vodafone Idea can benefit at this juncture. Vi can also implement a tariff hike but offer slightly more affordable tariffs than Airtel or not implement it for a bit of time. This will give price-sensitive customers an incentive to move towards Vi.

The pace at which Vi has added 4G customers in the last few quarters is quite slow and wouldn't be too meaningful for the investors. During Q2 FY23, Vi only added 1.6 million new 4G customers. Moving early with the tariff hikes can also be a risky play. While Airtel hasn't implemented the tariff hike in all the circles, the telco might do it soon. Vi may move in the same direction as well to improve its average revenue per user (ARPU). But if Vi is able to delay the tariff hikes, it would mean that the telco would get a chance to add some more users.

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