Bharti Airtel Raises Mobile Tariffs by Up to 21% Following Industry Trends
Bharti Airtel has announced a rise in mobile prices of 11 to 21 percent, commencing July 3, 2024. This move comes after Reliance Jio boosted its pricing by 12 to 27 percent just the day before, marking the first increase in two and a half years.
Airtel’s changed rate structure affects a variety of unlimited call plans. For example, the pricing for the Rs 179 plan has been increased to Rs 199, the Rs 455 plan to Rs 599, and the Rs 1,799 plan to Rs 1,999. According to a statement by Bharti Airtel, the price rise is intended to be minimal, particularly for entry-level plans, with an average daily increase of less than 70 paise, to reduce the impact on budget-conscious consumers.
The company has stressed the importance of boosting mobile Average Revenue per User (ARPU) to more than Rs 300 in order for Indian telecom providers to retain a financially sustainable business model. This action is part of Airtel’s overall effort to improve its financial health and operational stability.
In early trade, Bharti Airtel‘s shares rose by Rs 18.25, or 1.24 percent, to Rs 1,490.05 per share.
According to JM Financial’s study, rate increases by both Bharti Airtel and Reliance Jio could result in a modest 1-3 percent increase in ARPU/EBITDA forecasts for FY25 and FY26. The firm reaffirmed its strong belief in a ‘BUY’ recommendation for Bharti Airtel, expecting a 10-12 percent compound annual growth rate (CAGR) in industry ARPU, reaching Rs 300 in the next 3-4 years. This growth is attributed to the consolidated industry structure and the higher ARPU requirement for Jio to justify significant 5G capital expenditure and its potential IPO.
However, JM Financial maintained a ‘SELL’ rating on Vodafone Idea Limited (VIL) and a ‘HOLD’ rating on Indus Towers, stating that VIL’s long-term viability remains dubious despite recent fund-raising efforts and is primarily reliant on significant favorable government support.
The Indian telecom sector is changing dramatically as major firms adapt their pricing strategies to strike a balance between financial health and competitiveness. These events are widely monitored by investors and experts because they have far-reaching consequences for the market and consumers.
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