Vodafone Idea recharge plan prices expected to rise 15-20 percent soon

Highlights
  • Analysts expect a potential 15-20 percent tariff hike in the telco’s current plans
  • Vodafone Idea will be the first telco to hike prices

Vodafone-Idea, among other telecom players, is expected to increase prepaid and postpaid plan prices soon. Analysts believe that there could be a potential tariff hike of 15-20 percent in the Indian telecom sector to compensate for the weakening subscribers growth, though it only names Vodafone Idea as the operator that will increase prices. It was recently report that Vodafone Idea (Vi) will be the first telco to increase the prices of its recharge plans, ahead of Jio and Airtel. According to the latest report, Airtel won’t be increasing plan prices and doesn’t mention Jio at all. To recall, the telcos, including Airtel, Jio, and Vodafone Idea, increased the prices of their prepaid packs by around 20 percent last year.

Per ET Telecom, Motilal Oswal Financial services have said in a report that, “A price hike, which looked uncertain in the last 6-9 months due to the challenging economic scenario, has started to look imminent with weakening subscriber growth across players. Our recent interactions with industry experts indicate a potential price hike of 15-20 percent in the next two months.”

Vodafone Idea will reportedly lead the way in increasing plan prices owing to its current financial situation. “Delays in floor tariff could force Vodafone Idea to raise prepaid tariff in 3-6 months as the telco stares at a financial crisis in absence of any funding, weak liquidity position and reducing subscriber growth,” CLSA was quoted as saying in ET’s report. The telco recently increased the prices of its select postpaid plans in India. Post this move, Vodafone Idea postpaid tariffs are 7 percent higher than Airtel’s and about 60 percent higher compared to Reliance Jio plans.

That said, Bharti Airtel doesn’t seem to be increasing the prices of its plans anytime soon as the company is seeing some positives in the subscribers and market revenue share. The telco is said to be gaining subscribers – 10 million in 1HFY21 versus a mere 1 million in FY20, and an increase in ARPU (average revenue per user), which is presently at 12-24 percent. “With an intensifying market-share battle, sector floor tariffs will be preferred, in our view. And even if Bharti Airtel does not lead in tariff hikes, it had the best flowthrough of Dec-19 increases and its Arpu is at a 12-24 percent premium to peers,” CLSA added.