Airtel hikes prepaid tariffs by 20%, Vodafone Idea likely to follow suit

Company makes the first move to improve the financial sustainability of the telecom sector.

Telecom firm Bharti Airtel has hiked by around 20 per cent its pre-paid plans, making the first move to improve the financial sustainability of the sector.

Vodafone Idea ( Vi, is expected to follow suit, as its chief executive officer Ravinder Takkar indicated last week that tariff hikes will happen soon. The company however has not yet made an announcement. Airtel and Vi had hiked rates in entry-level pre-paid plans and certain postpaid and family packs a few months back.

Airtel’s latest hikes will be for rates across all slabs (Rs 79 to Rs 2,498). It increased rates for data top-ups as well and said the new tariff plan will come into effect from November 26.

Pre-paid customers account for 90-95 per cent of customer base for Airtel and Vi.

"Bharti Airtel has always maintained that the mobile Average Revenue Per User (ARPU) needs to be at Rs 200 and ultimately at Rs 300, so as to provide a reasonable return on capital that allows for a financially healthy business model," the company said in a statement on Monday.

"We also believe that this level of ARPU will enable the substantial investments required in networks and spectrum. Even more important, this will give Airtel the elbow room to roll out 5G in India," it added.

Airtel currently has the highest ARPU among the telecom operators. In the second quarter FY 2022 it reported an ARPU of Rs 153. Reliance Jio and Vi reported ARPUs of Rs 143.6 and Rs 109 respectively.