Reliance Jio, India’s largest mobile service operator, increased its rates by 20% on Sunday, joining industry competitors Bharti Airtel and Vodafone Idea (Vi) in doing so earlier this week. The new Jio rates will take effect on December 1st. New unlimited plans have been launched by the telecom. Upholding the promise of providing the best quality service at the lowest price globally, Jio customers will continue to be the biggest beneficiaries.
Tariffs on all current charges will be affected by the shift (Rs 75-2,399). While Airtel and VIO went for a 25% increase in their entry-level slabs, Jio decided on a 21% increase in this sector. Even though firms, particularly Airtel and Vi, had long advocated for a price increase, they were hesitant to make the initial move for fear of losing users. Last Monday, Airtel took the plunge, and Vi swiftly followed suit.
Airtel has the highest ARPU among telecom operators at the moment. It had an ARPU of Rs. 153 in the second quarter of FY22. The ARPUs for Jio and Vi were Rs. 143.6 and Rs. 109, respectively. As per analysts, Jio’s tariffs were expected to be revised when competitors opted to raise their prices. In our opinion, not hiking prices will be a missed opportunity for Jio, as it will be tough for it to earn 20% upfront incremental revenue by luring price-sensitive consumers, probably from Bharti and Vi.
The amount of Jio’s raise will be a crucial aspect to watch, but they expect it to retain a similar degree of discount to rivals as before to preserve its value offer for users, as per Kotak Institutional Equities in a study released last Thursday.
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