Vodafone Idea Has to Push for Tariff Hikes Earlier Than Jio, Airtel: Analysts

The much-anticipated tariff hikes have been delayed by the telecom sector owing to multiple reasons. According to the analysts, the possibility of a higher subscriber churn rate, indirect inflation, and the amount of money spent on the 4G spectrum auctions are key reasons for the industry to not go for the tariff hikes right away.

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Tariff hikes will directly impact the market share growth of the telcos. While Jio and Airtel are wary of that, Vodafone Idea (Vi) is tough because of its financials.

Vi recently increased the tariffs of its two entry-level postpaid plans earlier priced at Rs 598 and Rs 749 to Rs 649 and Rs 799. Even though it isn’t a major move by the telco, it is a sign that Vi will go for tariff hikes much earlier than Jio and Airtel because it desperately needs to improve its average revenue per user (ARPU).

Vi’s Declining Subscriber Base and Financial is the Reason for Early Tariff Hikes

With an increase in the tariffs, Vi will be able to increase its ARPU and, in turn, overall revenues. However, the increased prices will directly impact the market share of the telco.

Vi’s subscriber base has been declining for consecutive months now. With the prices moved to an even expensive zone, most of the Vi users who are on the edge of porting out will surely make their move to either Jio or Airtel.

But there is nothing Vi can do about it at the moment. The telco severely needs higher revenues to stay afloat and compete with the other two private operators.