With the exception of Reliance Jio, major companies in the Indian telecom industry either increased prices or reduced the validity of their tariff plans during mid-November. Now, the threat of further tariff hikes is looming in the next few weeks, involving all three major private sector companies—Bharti Airtel, Vi, and Reliance Jio—as well as state-owned BSNL.
Impact on telecom companies' revenue
The average revenue growth of telecom companies has seen a sharp decline, falling to around 10 per cent in the September quarter from the 14-16 per cent recorded in the previous four quarters. This figure is expected to decline further in the December quarter. Consequently, analysts anticipate a 15 per cent increase in overall telecom tariffs.
A look at recent price adjustments
The sector has already seen adjustments this quarter:
- In November alone, Vodafone Idea (Vi) increased the price of its Rs 1,999 annual plan by 12 per cent, and its 84-day validity plan saw a 7 per cent increase.
- Bharti Airtel increased the price of its cheapest voice-only plan by Rs 10, moving it from Rs 189 to Rs 199.
- State-owned provider BSNL reduced the validity of its entry-level prepaid plans. While the sticker price remained the same, the reduced validity indirectly passed the inflationary impact on to users.
Brokerage firm predicts price surge
According to an ET Telecom report, brokerage firm Motilal Oswal suggested that, due to stable inflation and the absence of any major elections in the near future, telecom companies may return to a normal tariff hike cycle in December.
As a result, the popular 28-day validity plan offering 1.5GB of data per day could see a price increase of around Rs 50. If implemented, this would significantly impact consumer spending.
Vi's likelihood of increasing prices
Vi is currently losing much of its low-end user base to competitors Airtel and Jio, though its long-standing loyal users remain, and its annual plans continue to be popular.
Vi’s management has previously indicated that its next price hike will be smaller than previous ones. However, the company has not imposed significant burdens on users for quite some time—a factor that may be taken into account as the company looks to increase revenue after a 15-month gap between major tariff revisions.
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