• Source:JND
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Airtel, Jio Tariff Hike News: Reliance Jio and Bharti Airtel have announced their revised tariff plans in India. While the price rise in the case of both telcos steeped over 20 per cent in the case of some recharges, the decisions came on the expected lines after the rapid rollout speed of 5G in the country. Vodafone Idea (Vi) is expected to follow in similar footsteps soon and introduce its revised plans.

Jio And Airtel Tariff Hike And ARPU: What's The Connection?

While Jio did not state a clear reason in its press release as to why it increased prices, Airtel has shared a few glimpses which can give us hints as to why this price rise was on the expected lines and almost inevitable. Airtel insisted on an Average Revenue Per User (ARPU) of over Rs 300 for a "financially healthy business model" for telecom companies in India. Similarly, Jio stated that it aimed to "strengthen a sustainable telecom industry" with the new unlimited plans.

Also Read: Airtel Hikes Mobile Tariffs By 10-20%, Effective From July 3

Airtel claims this ARPU will allow substantial investments in technology and network spectrum while delivering modest returns on capital. According to The Indian Express, Airtel's ARPU was Rs 209 in March Q4 of FY 2024. Compared to Airtel in the same quarter, Jio (Rs 181.70) and Vi (Rs 146) stood significantly lower.

An analyst note by Bernstein talked about anticipations that the telecom service providers were expected to increase the prices of their plans after the general elections. This could lead Airtel to gain Rs 280 ARPU by FY26 and Rs 300 by FY27. The disruption in the telecom sector dates back to 2016 when Jio announced its 4G services for free for a limited duration and then gradually punched a price tag to them.

This rapid disruption led other telcos to reduce plan prices significantly to survive the competition. As a result, India enjoyed the cheapest data rates across the globe with users flocking at a flood-level pace to buy a SIM connection from Jio. However, other Telecom companies called for a gradual price increase at regular intervals to improve their financial backing.

Also Read: Jio Tariff Hike: Reliance Jio Mobile Data Plans Hiked By Up To 27%, To Be Implemented From July 3; Details

A sizeable increase in expenditure for telecom service providers can also be attributed to the rollout and development of 5G services in India. These companies also offered unlimited 5G data to users who recharged with a plan of 1.5GB/day data. However, this benefit has now been capped to 2GB/day data plans. For context, the latest spectrum auction witnessed a lukewarm reaction from the service providers. It collected Rs 11,340.78 crore for the government, just 12 per cent of the reserve price of Rs 96,317.65 crore.