Why Is Vi Delaying Tariff Hike Until April-June FY22?

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Vi (Vodafone-Idea), which was earlier planning to increase its tariff packs, has now postponed its plans for some time. The financially hit telecom operator has postponed the plan to Q1 FY22, which means it might increase the prices in the April-June quarter. Earlier, Vi was planning to raise tariffs by the end of --March 2021.

 
Why Is Vi Delaying Tariff Hike Until April-June FY22?

This development comes soon after Reliance Jio launched new plans for JioPhone, which are 25 percent cheaper than other plans and expected to attract 2G users towards its network. "The top management (of Vi) was hoping to push out a tariff raise by now but have decided to wait for a few more months," a senior telecom executive was quoted by ET. "The hike could come in by the end of the first quarter of FY22," he added.

Currently, Vi is behind both Airtel and Reliance Jio in terms of average revenue per user (ARPU) as it stands at Rs. 121, while Airtel has Rs. 166 and Jio managed to get Rs. 151. The report also said that Vi's decision of postponing the tariffs hike is not going to shock analysts as it was expected after the JioPhone announcement, where it is targeting all feature phone users.

Tariff Hike Increased Operators Revenue

A new report by India Ratings said that the industry revenue has been increased to Rs. 443 billion in the Q3FY21. The report said that tariff hikes helped telcos to increase revenues and ARPU. "This is also reflected in the growth in ARPU in 3QFY21 for all the telecom players, wherein BAL and VIL reported an increase in ARPU by 2 percent and RJio reported an increase in ARPU by 4 percent QoQ in 3QFY21," the report added further.

Why Telecom Operators Increased Tariff Prices

Both Airtel and Vi have faced huge losses due to Reliance Jio's strategies and its tariff plans. Reliance Jio, which is just four and a half-year-old operator, has captured 35. 43 percent share in December last year, while Airtel, which is operating in 18 countries and started its operations during 1995-96 in India has 29.36 percent share in the wireless segment. On the other hand, Vi has decreased its share to 24.67 during the same period. This clearly shows that Airtel and Vi are nowhere close to Jio in terms of subscribers or market share.

 

However, to increase their revenue both telecom operators increased tariff prices in December 2019. Telecom operators have raised tariff plans of their most popular prepaid and postpaid plans. Furthermore, increasing tariffs of plans and ARPU has become a trend in the industry and is expected to stay for a longer period.

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