Vodafone Idea hikes prepaid tariff by 25%

Following Bharti Airtel’s price hikes announced on Monday, Vodafone Idea hiked its prepaid tariff plans today by 25 per cent, on Tuesday. The price hike is similar to what Bharti Airtel announced on Monday indicating that the telecom industry is looking to ramp up revenues.

Vodafone Idea has increased tariffs for prepaid users by 25 per cent starting November 25. The lowest plan available on the operator's network will now be priced at ₹99 instead of ₹79 earlier. The top-end plan of ₹2,399 will be priced at ₹2,899.

Following Airtel’s announcement yesterday, analysts had predicted that the remaining two telco’s Vi and Reliance Jio will be announcing their own price hikes soon since a tariff hike is long overdue for ‘ARPU repair’ of the cash strapped industry. In the span of a single day, Vi followed suit to announce its own new tariff plan.

Reliance Jio, now remains the sole telco to increase its tariffs and is being closely watched by analysts. The high price point of the recently launched JioPhone Next (link) could limit its traction and also be interpreted as a sign of Jio toning down its pricing aggression, according to analysts. “which once again suggests the company too may follow through with some hikes. We will keenly monitor developments on this front”, a report by Citi Research said on Monday. 

Analysts, however, believe that Jio will continue to be priced much lower than the other two operators, in order to keep an upper hand in the tariff war between the three telcos. “The quantum of the hike from Jio will be a key thing to watchout for as we assume it to maintain a similar level of discount to Bharti as earlier,” said Tarun Lakhotia, Director, Kotak Institutional Equities.

“Indian telcos have among the lowest ARPU in the world and subdued return on capital employed (RoCE), despite having the second­ highest average data traffic per user. An adverse triad of high capex, low ARPU and sizeable adjusted gross revenue liabilities have resulted in the sector’s RoCE sliding to 3 per cent last fiscal, from 8 per cent in fiscal 2016”  said Nitesh Jain, Director and Rakshit Kachhal, Associate Director, Crisil Ratings Limited. They added that in a scenario where all three telcos raise their tariffs, the industry is looking at an ARPU increase of 15-20 per cent, and a RoCE increase to 7 per cent.

Vi’s New Prepaid Tariffs:

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