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Reliance Jio and Airtel Announce Significant Tariff Increases in India

Reliance Jio and Airtel, India’s largest telecom operators, have started implementing significant tariff hikes, with some plans seeing increases of up to 20%

Analysts expect these hikes to set the trend for the entire industry in the world’s second-largest wireless market.

Jio’s New Pricing Structure

Effective from July 3, Jio’s revised pricing structure includes:

•The entry-level Rs 155 ($1.87) plan, offering 2GB of data and unlimited calls, will now cost Rs 189.

•A plan providing 1GB of daily data usage will increase from Rs 209 to Rs 249.

Jio is also raising prices for its two-month, three-month, annual, postpaid, and data add-on plans.

Credit: Tech Crunch

Airtel’s Tariff Hikes

Airtel announced a 10-20% increase across its popular plans and expressed support for Jio’s move. Airtel maintains that the average revenue per user (ARPU) in India should exceed Rs 300 ($3.6) to sustain a financially healthy telecom sector. Airtel’s current ARPU is about Rs 210, and its new prices will also take effect from July 3.

Background and Industry Impact

Jio, a subsidiary of Reliance Industries, revolutionized India’s wireless market in the last decade with its affordable plans, prompting competitors to slash their prices. Akash Ambani, chairman of Reliance Jio, stated that the price hike is aimed at fostering industry innovation and driving sustainable growth through investments in 5G and AI technology.

Despite the increases, Jio’s plans remain among the most affordable globally. Additionally, Jio will offer “unlimited 5G data” for customers subscribing to plans with 2GB daily data usage or more.

Market Dynamics

Reliance Jio, Bharti Airtel, Vodafone Idea, and BSNL-MTNL dominate the Indian wireless market. As of April, Jio held over 40% of the market, with Airtel at 33.1%.

Analysts have anticipated this shift in pricing strategy, projecting an increase of 15-25% to stabilize and grow ARPU. This change underscores the sector’s transition from focusing on market share to emphasizing sustained monetization, especially as operators complete their 5G rollouts. Indian telecom companies have invested over $20 billion in 5G airwaves and are seeking ways to increase revenue. Last year, they suggested that tech firms pay for network usage.

Future Outlook

Goldman Sachs predicts that Reliance Jio may implement another tariff hike within the next two years, suggesting a positive market reception to Jio’s proactive approach to tariff increases. They foresee Bharti Airtel’s ARPU settling close to Rs 250, with the possibility of another hike in the next 1-2 years to reach the company’s target ARPU of Rs 300.

Bank of America notes that Indian consumers are likely to accept these price hikes due to limited alternatives and the increasing importance of data offerings.

This development marks a pivotal shift in the Indian telecom industry’s approach to pricing and revenue generation.

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