Telecom giants Reliance Jio and Bharti Airtel are working out on different strategies for tariff hike after the parliamentary elections. According to company executies, as quoted by media reports, Bharti Airtel intends to increase headline tariffs, whereas Jio may opt for a different route.
Instead of hiking tariffs, Jio is expected to focus on initiatives that encourage greater data usage, enticing users to transition to higher-tier packages. This strategy is anticipated to enhance Jio’s average revenue per user.
As Bharti’s tariffs already command a premium over Jio’s, the disparity between the two is expected to widen. Jio, maintaining a flat Arpu on a sequential basis in the October-December quarter, anticipates benefiting from subscriber churn from Bharti, consequently bolstering its Arpu growth. With the commencement of the Indian Premier League, Jio is optimistic about a surge in data consumption.
Also read: Telecom tariff hike of 20% likely in 2024, post elections, says BofA Securities; Airtel shares zoom
Increasing 5G data usage
Executives noted that due to increased data consumption in 5G packs, users are upgrading to higher plans for an enhanced viewing experience. They also highlighted Jio’s efforts to boost the adoption of its JioFiber broadband plans by bundling them with various services. With no complimentary offerings in these packs, user recognition of their value is heightened.
“With users moving to higher 5G packs, higher realisation from Fiber plans, and some churn from other operators, we expect Arpu to rise without going for a headline tariff hike,” executives were quoted as saying by The Financial Express.
Analyst projections indicate that Jio is experiencing the most rapid growth in the home broadband sector, boasting a year-on-year increase of 37.6%. On the other hand, analysts note that Airtel has taken proactive measures by adjusting tariffs across multiple plans to push its Average Revenue Per User (ARPU) beyond ₹200 per month. However, to continue increasing its ARPU, Airtel may need to resort to raising headline tariffs. Presently, Airtel leads the industry with an ARPU of ₹208, surpassing Jio’s ₹182 and Vodafone Idea’s ₹145.
Brokerages have factored in tariff increases by operators following the elections, with many believing that Bharti will spearhead this initiative.
“We expect tariff hikes to be announced post elections (July to October time frame). We expect a strong 15% tariff hike. The tariff hike will be led by Bharti and that will see Arpu stabilising to ₹260+ levels by FY26,” Bernstein said in a recent report.
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The market consolidation persists, with Jio and Bharti collectively holding approximately 82% of the market share, while Vodafone Idea trails at 18.5%. Notably, Jio’s subscriber share rose to 46% in the October-December quarter, up from 41.6% in the same period of the previous fiscal year. Additionally, Bharti’s subscriber share increased to 33.5% during the October-December period, compared to 31.2% in the corresponding period of the previous fiscal year.
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Published: 25 Mar 2024, 03:59 PM IST