Jio, Airtel, VI Push For Tier Based Tariff Plans

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A tier-based pricing model can only succeed if implemented by all telcos. 

Reliance Jio, Bharti Airtel, and Vodafone Idea (Vi) are encouraging customers to switch to tier-based postpaid tariff plans, where users with higher data usage pay more.  The aim is to boost the average revenue per user (ARPU), a key performance metric, for the operators without needing headline tariff hikes. 

These plans often bundle multiple mobile connections, data allowances, and OTT streaming app subscriptions, enhancing ARPU. Axis Capital’s research note indicates that Airtel is using its Airtel Black offerings, Jio is promoting postpaid plans and 5G-based fixed wireless plans (Jio AirFiber), and Vi is focusing on postpaid family packs with OTT subscriptions and other offers to drive this premiumisation strategy.

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Vi has announced plans to raise ₹45,000 crore to expand its 4G coverage and roll out its 5G network. Analysts predict decent ARPU upticks for the top two telcos if industry-wide tariff hikes occur post-elections, with JM Morgan projecting an 11/12% ARPU increase for Jio in FY 25/26 and Citi Research estimating Airtel’s ARPUs at ₹230/252 in FY25/26 after a 15% 4G tariff hike from mid-CY24.

Industry executives and analysts believe that a tier-based pricing model can only succeed if implemented by all telcos. Vi’s CEO Akshaya Moondra and Airtel’s managing director Gopal Vittal have both emphasised the need for a pricing structure where users pay more for higher usage, which aligns with global practices.

Fitch’s senior director Nitin Soni expects the strategy to work, given that most data consumption in India occurs via mobiles, with average monthly mobile data usage per user exceeding 22GB. Soni also anticipates a potential 20% headline rate increase by Jio, Airtel, and Vi in 2024 to recover investments in 5G spectrum and network rollouts.

 

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