“Jio recharge prices will be increased in the ‘next few weeks’ but the company has not revealed exactly how much the tariffs will rise”
A day after Airtel and Vodafone-Idea announced they will increase their respective tariffs, Jio too has announced it will hike the prices of its services. In a statement to the media, Jio said its tariffs will be increased in the next few weeks. Like its two rivals, the Mukesh Ambani-promoted telecom operator too hasn’t revealed how much the prices will rise for the calling and data packs. For now, all eyes are on December, when these tariff increases take effect. However, this is the first time in three years we are seeing an industry-wide rise in the prices of prepaid recharge packs and postpaid plans.
The launch of Jio services in 2016 had been a watershed moment for the Indian telecom industry, which had been defined by high mobile data prices till then. Jio brought mobile data and free calls at ultra-cheap prices to the 1 billion+ mobile phone users of the country. This led to a data explosion that saw the data consumption of Indian subscribers zoom to the top of the rankings worldwide, with the average subscriber consuming over 10GB data per month.
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However, while the consumer enjoyed 4G data at low prices (it was, in fact, free for the first six months), the incumbent telecom operators suffered. Despite lowering mobile data prices and making calls free to compete with Jio, several telecom operators fell by the way side. This includes MTS India, Aircel, Telenor, Tata Docomo, Reliance Communications, etc. Vodafone and Idea decided to merge to become, at least then, the biggest operator in the country. On the other hand, the government decided to merge BSNL and MTNL into a single entity and infuse cash in them in the coming years to make them ready for the 5G-centric future.
The wave of consolidation and shutdowns eventually left India with just four major telecom operators – Bharti Airtel, Vodafone-Idea Limited, Reliance Jio, and BSNL-MTNL. Now, when the country’s telecom sector finally seeing some stability, it was dealt a huge blow by the Supreme Court in October 2019. The apex court sided with the government in the longstanding AGR (Adjusted Gross Revenue) case, slapping a Rs 92,000-crore penalty on the operators.
This led to Vodafone-Idea and Airtel announcing Rs 50,900 crore and Rs 23,000 crore losses for the July-September quarters. This is a crippling blow for the two companies, whose future had become unclear after the quarterly results were announced last week. However, their share prices went up as much as 30 percent earlier today on the back of the tariff increase they announced. We can expect a similar market response tomorrow for Reliance Industries Limited when the markets open for trading tomorrow.
Jio had a price hike of sorts when it increased tariffs owing to IUC charges, making the new one the second big blow to subscribers in less than a month. We will, however, have to wait a few more weeks to figure out the exact magnitude of the price hike on the customers.