Bharti Airtel on Monday announced a 20-25% hike in tariffs across its prepaid plans, a move which would take its average realisation per user (Arpu) closer to the Rs 200 mark against the Rs 153 currently. This is the first major tariff hike across the board since December 2019. In July this year, the company had effected a limited tariff hike in the corporate postpaid plans and the entry-level prepaid plan.
Analysts also expect Vodafone Idea and Reliance Jio to now come out with tariff hikes. FE had recently reported that with Reliance Jio’s new entry-level smartphone, launched around Diwali not exactly being a disruptor in terms of pricing, rival operators like Bharti Airtel and Vodafone Idea are likely to hike tariffs.
The new rates will come into effect from November 26.
Bharti has raised the entry-level tariff plan by about 25%, while for most other higher denomination plans the increase is of about 20%. The company has also increased tariffs for data top-up plans by about 20-21%.
“Our preliminary calculations suggest that the announced hike will boost Bharti’s India wireless Ebitda by Rs 8,000-8,500 crore, assuming modest level of SIM consolidation and plan downgrades,” Kotak Institutional Equities said in its report. “We note that the announced hike is adequate to meet our FY2023E forecasts, currently based on India wireless Arpu of Rs184/month versus Rs 157/month realised by Bharti in 2QFY22 and hence, we do see upside to our earnings estimates expecting further hike in tariffs during the next fiscal year,” Kotak added.
The company said it has always maintained that the mobile average revenue per user needs to be at Rs 200 and ultimately at Rs 300 to provide a reasonable return on capital that allows for a financially healthy business model. “We also believe that this level of Arpu will enable the substantial investments required in networks and spectrum. Even more important, this will give Airtel the elbow room to roll out 5G in India,” Bharti said in a statement.
The entry-level plan now comes for Rs 99, against Rs 79 earlier, which works out to an increase of 25.3%. This comes with 28 days validity and benefits like 50% more talk time worth Rs 99, 200MB data, 1p/sec voice tariff. The other categories where a hike has been announced are unlimited voice bundles and data top-ups.
Similarly, in the higher denomination plans, the earlier package of Rs 149 will now be Rs 179 with a validity of 28 days and benefits such as unlimited calling, 100 SMS/day, 2 GB data; even as at the top end the Rs 2,498 plan has been hiked to Rs 2,999 and comes with 365 days for unlimited calling, 100 SMS/day and 2 GB/day data. For data top-ups, the Rs 48 plan would now cost Rs 58, offering 3 GB data; while the Rs 98 plan has been increased to Rs 118 with 12 GB data. The company has also announced a tariff hike in Rs 251 data top-up plan, which will now cost Rs 301 with 50 GB data.