Telecom companies in India are preparing for price hikes. This includes Airtel, Vodafone Idea, and BSNL. Reliance Jio is the only major exception currently. The hikes may happen within the next few weeks. This will impact millions of prepaid mobile users directly.
The telecom industry’s revenue growth is slowing down. It fell to around 10% in the September quarter. Previous quarters saw growth between 14-16%. Analysts predict a further dip in December. This pressure is forcing companies to raise tariffs.
Vodafone Idea already increased its annual plan prices. It hiked the ₹1999 plan by 12% in November. The 84-day plan saw a 7% price rise. Airtel raised its cheapest voice-only plan by ₹10. BSNL reduced validity days instead of raising prices.
Brokerage firm Motilal Oswal forecasts a tariff hike soon. Stable inflation and no near-term elections create a window. A common 28-day plan could see a ₹50 increase. This plan typically offers 1.5GB daily data. Such a hike would hit user budgets hard.
Vi experiences a loss of low-level users to its competition, Jio & Airtel, while some of its loyal users on the annual plan will still remain with Vi. Vi’s management stated there would be an upward adjustment to pricing, however this adjustment is being made after 15 months since the last price adjustment, and management will only raise the price to a lesser extent than the competition for fear of overloading them already having a pricing disadvantage compared to the competition of an average usage incurred.
The ₹50 increase may be a lot for a budget-conscious user. The increase to their monthly cost may make it more difficult for families with multiple lines to manage their monthly costs. They will see increases in the price they pay per GB of Data. Consumers may now have to budget for a more expensive phone bill.
The major reason for tariff adjustments is to increase their average revenue per user generated by their network. This revenue will be used to fund the building and upgrading of their networks. Funds required for 5G rollouts require a significant investment of capital, while tariff increases are a direct way for companies to generate more income; therefore, companies argue that tariff increases are necessary to continue to operate.
Consumers can begin to take some actions towards lowering their costs in the way of making better use of their monthly data usage and moving to a lower-cost plan (if available). Additionally, some operators may also provide savings through longer-validity plans; therefore, consumers should also consider comparing the pricing of other operators against all operators to see if they can lock into an operator now at better rates than other operators.
This change will drive up costs of the services offered by the communication industry contributing to the overall inflation in prices for goods and services. Communication services are included in the overall inflation rate for the economy. The government will monitor the price increase impact. The Telecom Regulatory Authority may also observe the hikes. The final decision rests with the companies.
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