RELIANCE’S Jio and Bharti Airtel, India’s two largest telecom operators, raised their tariffs for the first time in three years, aiming to begin recouping the billions poured into 5G technology over two years.
Bharti Airtel said on Friday it would raise tariffs by 10 to 21 per cent, a day after market leader Jio said it would hike prices by 13 to 27 per cent.
No 3 player Vodafone Idea, which has been losing subscribers to its rivals, is yet to raise prices.
India is the world’s second-largest smartphone market but has among the cheapest tariffs. Jio’s strategy of rock-bottom prices to lure subscribers meant its peers had to follow or risk losing out by raising prices.
While the companies have not raised tariffs since 2021, they have spent heavily on boosting their infrastructure and even more on acquiring spectrum, including 5G airwaves for the first time in 2022, a year after the last round of tariff hikes.
The 5G rollout alone would have cost the companies around 1.5 trillion rupees (roughly S$24.4 billion) but their return on investment will have been in single digits, estimated Balaji Subramanian, a research analyst at IIFL Securities.
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The tariff hikes, effective from Jul 3 for both Bharti Airtel and Jio, will improve their returns, he said.
Jio’s price rise, its third in five years, should boost its average revenue per user (ARPU) by about 17 per cent over the next year, Morgan Stanley said in a note dated Jun 27.
Jio’s ARPU stood at 182 rupees in the January-March quarter. Bharti Airtel reported an ARPU of 209 rupees, a result of it switching strategy a few years ago to focus on higher-paying subscribers.
Vodafone Idea had the lowest ARPU at 146 rupees and, according to Subramanian, needs to hike tariffs the most. The company did not respond to a Reuters request for comment.
Vodafone Idea’s shares were down 1 per cent in afternoon trading, while Bharti Airtel fell about 1 per cent. Jio-parent Reliance’s shares jumped 3 per cent, with the retail-to-energy conglomerate’s stock rallying for a fourth consecutive day. REUTERS
