Further expansion of this strategy however may be hindered by Reliance Jio’s Monday launch of the Jio Bharat phone which has a Rs 123 plan with 28 day validity offering 14 GB data, analysts said.
“Vodafone Idea last week raised entry level tariffs (for 28 days validity) to Rs179 per month (from Rs99) in two more service areas (total 3 service areas now),” analysts from Goldman Sachs noted in a recent report.
Brokerage Nuvama added that Vi has expanded its move to reduce the validity of its Rs99 minimum recharge from 28 days to 15 days to Gujarat and Delhi as well, in addition to Mumbai.
But “Vodafone Idea could potentially pause raising entry level tariffs in the remaining 19 service areas until the impact of Jio’s new launch can be better assessed,” Goldman Sachs added.
The cash-strapped telco had reduced the validity of its Rs 99 plan to 15 days in May this year, effectively increasing the price of the entry level monthly (28 day) plan to Rs 179. Vi chief executive Akshaya Moondra had said on the Q42023 earnings call that the telco will observe the impact of the initiative and take a call on expanding the strategy to other markets.
“We will continue to observe the space and make interventions as we go forward,” Moondra had said.
Vi management has maintained that the industry needs tariff interventions to increase average revenue per user (ARPU). On the recent earnings call, Moondra had also reiterated the need to change the telecom pricing structure in the country if telcos are to make healthy returns on capital invested.
A similar hike has been affected by Bharti Airtel when it raised its entry level tariff in 2 circles in November 2022. This has been extended to all 22 circles now.
India last saw tariff hikes in November-December 2021, the complete effects of which reflected in Vi’s full fiscal revenue performance for FY23. Going forward however, headline tariff hikes will be instrumental for the telco’s health, analysts maintain.
