After Jio, Bharti Airtel Announce 10-21% Mobile Tariff Hike, Check New Price List Here

Airtel Price Hike: Bharti Airtel, the country's second-biggest telecom provider, announced a substantial hike in mobile tariffs in response to Reliance Jio's most recent change. From 10 to 21 percent, the increase will be implemented starting on July 3, 2024. The telecom company owned by Sunil Bharti Mittal called the price rise "very modest," with an entry-level plan seeing a daily hike of less than 70 paise.

Need for Higher ARPU

In order to preserve the financial stability of the Indian telecom industry, Bharti Airtel underlined the need to raise the Average Revenue per User (ARPU) over Rs 300. "We believe that this level of ARPU will enable the substantial investments required in network technology and spectrum and offer a modest return on capital," the company stated.

Industry-Wide Tariff Adjustments

The telecom giant welcomed the industry's adoption of "repair tariffs." Reliance Jio unveiled several new unlimited plans earlier this week that will go into effect on July 3, 2024. These plans include unlimited 5G data for plans with 2GB/day and above, and they start at Rs 189 for 2 GB per month and go up to Rs 3,599 for 2.5 GB per day annually.

Expected Reactions from Competitors

After Jio made its announcement, many people expected Bharti Airtel and Vodafone Idea to make a comparable change to their cellphone prices. Tariff rises, according to Indian telecom providers, are essential for long-term growth.

Bharti Airtel's ARPU Goals

Bharti Airtel and its Chairman, Sunil Mittal, have frequently stressed the need to raise the current ARPU from around Rs 200 to Rs 300 or more. "We need to be at the Rs 300 ARPU level. First pitstop was Rs 200. That’s taken five to six years," Mittal noted in a February interview with Moneycontrol. Bharti Airtel's ARPU reached Rs 208 in Q3 FY24.

Historical Tariff Hikes

The last industry-wide tariff hike occurred in December 2021, with an increase of about 20%. Prior to that, telecom companies raised tariffs in December 2019, marking the first hike since Jio launched its service in 2016. The 2019 hike increased tariffs by 20-40%, while the 2021 hike saw a 20% increase, leading to an ARPU uplift of Rs 30 and Rs 36 over four quarters for Airtel.

Impact and Future Projections

Past hikes of 14-30 percent boosted ARPU by 10-16 percent for both Bharti Airtel and Jio, implying an ARPU transmission rate of 50-70 percent. "We assume a similar transmission rate this time around. The full effect of this tariff hike will be visible in the December quarter," noted Axis Capital in a report.

Morgan Stanley highlighted that Airtel's tariff hike could immediately boost stock sentiment, similar to the reactions in 2019 and 2021. However, they noted that this hike might not lead to a significant upgrade in EBITDA estimates.

Positive Outlook for Industry Growth

Analysts predict accelerated growth for the industry in the coming quarters, driven by tariff hikes. BNP Paribas expects the Indian telecom industry's revenue growth to remain in double digits over FY 24-26, propelled by tariff increases and customers upgrading to bundled plans.