Vodafone Idea puts off tariff hike to June quarter

may look at raising its tariffs by the end of the April-June quarter, putting off its plans to raise prices immediately after market leader Reliance Jio dropped its feature phone usage costs by 25%, people aware of the development said.

“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 said. “The hike could come in by the end of first quarter of FY22.”

The country’s third largest telco, which had an average revenue per user (Arpu) of Rs 121 — lower than

’s Rs 166 and Jio’s Rs 151 — as of December end, had planned to increase the tariffs by the end of this quarter but that plan has been shelved, the executive said.

Vi’s decision will not surprise the stock markets since analysts were expecting the telcos to push back their tariff hike plans after Jio launched offers on its 4G feature phone — JioPhone — in February, in a clear bid to target the country’s remaining 300 million feature phone users and reverse the recent slowdown in its 4G customer additions.

JioPhone is available under two offers — the VoLTE device is available with 24 months of unlimited voice calls and a monthly data allocation of 2GB at Rs 1,999, and at Rs 1,499 for 12 months of similar unlimited services.

This means the largest telco is still targeting subscribers inching towards its 500 million customer goal, analysts said.

But for a stressed telco like Vi, the JioPhone offer meant the telco would be robbed of its aim to usher in a 25-30% tariff raise for the industry like it did in December 2019.

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Vi did not respond to ET’s queries on the matter as of press time Sunday.

Vi managing director Ravinder Takkar had said in an analyst call in February that the company will increase rates when it is the right time. “We are not waiting for anyone. Tariff hike is much needed,” he had said.

Vi’s decision will also rein in rival Bharti Airtel, which has made it clear that it won’t be the first to increase tariffs but like before it will definitely follow.

Pushing through a quick tariff hike won’t be easy for the telco because it has a large 2G/3G user base, Ambit Capital said. The combination of patchy network availability and lower data usage by these 2G/3G customers would “affect Vi’s attempts to take any segmented price hikes”, especially if it wishes to retain its high data users or attract new customers on its network, the brokerage said.


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