Airtel and Vi may roll out indirect tariff hikes later this year, here is what it means

March 19, 2021

Airtel and Vi could introduce indirect tariff hikes to boost average revenue per user (ARPU), an online report citing industry executives and analysts has stated. Indirect tariff hikes would mean that even the pricing of the plans would remain the same, their benefits would, however, be reduced.

Further, the telcos could count the current tariffs as pre-tax or exclusive of taxes and users would be subjected to pay extra. As of now, all prepaid mobile plans are priced inclusive of taxes.
Apart from the pre-tax, the indirect methods of tariff hikes could include reducing benefits from a plan like the validity period of postpaid plans or cutting down on data or voice allowances on existing prepaid plans without changing the pack value. This would lead customers to opt for a plan of a higher value, analysts told ET.
PhillipCapital told the publication that it expects Vi and Airtel could indirectly introduce tariff hikes by “maintaining their current prepaid plans at the same price, but making them pre-tax, which would translate into an effective tariff hike of 18 per cent”. Further, reducing validities from 28 days to 24 days could result in a 16 per cent effective tariff hike without hurting the customers.
Some analysts also noted that the indirect tariff hike could prove to be unpopular leading to a churn with price-conscious users migrating to less costly alternatives like Jio, which already gives its current tariffs priced at a 10-15 per cent discount. Kunal Vora, a senior telecom analyst said that tariff hikes could lead to unnecessary confusion amongst consumers.

While Airtel MD Sunil Mittal had last year noted that the telco will not be the first one to introduce tariff hikes and will follow other telcos when they do it. Reports have also noted that Vi is eyeing a higher market share for which it is expected to keep the plans at the current pricing. Vi is not likely to increase tariffs until Q3 of 2021.
Airtel is gaining more new subscribers month after month. In January 2021, Airtel added 58.92 lakh new subscribers January 2021, while Jio added 19.56 lakh new subscribers and Vi added 17.10 subscribers. The total subscriber base of Airtel, Jio, and Vi as of January 2021 is 34.46 crore, 41.07 crores, and 28.59 crores respectively.