Major Change: Jio and Airtel Increasing Recharge Prices
Major Change: Jio and Airtel Increasing Recharge Prices
In a strategic move aimed at enhancing revenue growth, Reliance Jio and Bharti Airtel are reportedly considering a shift in their approach to 5G services.
Analysts suggest that both telecom giants might discontinue their unlimited 5G data plans for premium users and could introduce a 5-10% price increase for 5G services, compared to existing 4G rates, starting the latter half of 2024.
Industry experts foresee the telecom operators also raising mobile tariffs by a significant 20% in the September quarter of 2024.
This potential tariff adjustment is seen as an effort to improve Return on Capital Employed (RoCE), particularly amidst substantial investments in 5G infrastructure and heightened costs associated with customer acquisition.
For nearly a year, Jio and Airtel have enticed users with 5G services at 4G prices, coupled with unlimited data offers.
However, analysts predict a shift in this strategy as both companies gear up for a nationwide rollout of 5G services and prioritize monetization once adoption rates increase.
“With a growing emphasis on monetization and the completion of 5G coverage, we anticipate that the telcos may discontinue offering unlimited 5G data to their higher-ARPU data customers and introduce 5G-specific plans in the latter half of 2024,” noted Jefferies in a recent research note.
Jefferies further suggested that while the absolute prices for Airtel and Jio’s 5G plans may see a modest increase of 5-10% compared to 4G, these operators may sweeten the deal by bundling 30-40% additional data to encourage adoption and gain market share, potentially impacting Vodafone Idea (Vi).
However, during Airtel’s last earnings call in November 2023, Managing Director Gopal Vittal ruled out an immediate increase in charges for 5G services. He emphasized the current lack of applications that fully exploit the benefits of 5G technology.
Nevertheless, Vittal indicated that Airtel is open to adjusting mobile tariffs to raise the average revenue per user (ARPU) to around ₹250, up from the current slightly over ₹200.
