Airtel's tariff plan changes may benefit Vodafone Idea more: Analysts

Airtel's withdrawal of select prepaid plans could lift its ARPU, but analysts say Vodafone Idea may gain more if it follows with a similar tariff rejig

Bharti Airtel's move to upgrade users from some of its lower tariff prepaid plans by removing these plans altogether may actually benefit rival Vodafone Idea more than the No 2 carrier itself. According to JM Financial, Airtel discontinuing plans priced at ₹299, ₹319, ₹579, ₹619 offering 1.5 GB daily and ₹649 offering 2 GB daily, valid for 56 or 60 days, could lift its overall ARPU, or average revenue per user, by ₹5–6 or about 2 per cent, versus Q1 FY27 ARPU of ₹264, assuming that about 10 per cent of its overall subscribers upgrade to new plans that have ₹50 higher tariffs.

 

“If Vodafone Idea follows suit with a similar tariff rejig, this could increase its ARPU by ₹7–8 or about 4 per cent, versus Q1 FY27 ARPU of ₹177, or about 2 per cent in its FY27 EBITDA, and about 3 per cent in valuation, assuming that 15 per cent of its subscribers upgrade to higher tariff plan,” analysts at the brokerage said in a note Thursday. ARPU is a key metric of profitability for telecom operators. It shows how much they earn from a customer on a monthly basis.

 

“VI's options are interesting: it could either follow suit (5 per cent FY27 potential cash EBITDA upgrade), use the window until headline tariff hikes to gain subscriber market share – customers who use VI as the secondary SIM could make it the primary SIM, considering – or adopt a circle-by-circle strategy,” said analysts at IIFL Capital.

 

JM Financial estimates that about 128 million subscribers, making up 35 per cent of Airtel's overall subscriber base, subscribe to 1 GB or 1.5 GB per day plans. Notably, every ₹5 increase in ARPU lifts Airtel's wireless FY27 earnings before interest, taxes, depreciation and amortisation (EBITDA) by ₹1,200 crore or about 1 per cent. Morgan Stanley, on the other hand, said that the Sunil Mittal-promoted carrier could see an ARPU uptick of ₹8-12 on a gross basis, if 20-30 per cent of its India mobile wireless subscribers were to upgrade to the ₹349 plan.

 

Airtel is learnt to have discontinued the plans as of Wednesday, while Vodafone Idea or larger rival Reliance Jio have yet to make any announcements or changes to their tariff plans. Carriers have been tweaking their tariff plans as they nudge prepaid customers towards higher-priced prepaid plans and postpaid plans, while keeping headline tariffs unchanged. In August last year, Airtel withdrew its ₹249 entry-level 1 GB a day 28-day plan from online platforms, making ₹299 the starting plan with 1.5 GB per day allocation.

 

The No 2 carrier has maintained that higher data-using customers should pay more and that unlimited data plans were distorting the industry's pricing structure. “The most important thing is to repair the (pricing) architecture, meaning that for a very low level of pricing, you get unlimited data, which means ARPU (average revenue per user per month) is capped. That is not a healthy way to operate,” Airtel's executive vice-chairman Gopal Vittal said in the carrier's earnings call last week, pressing for fundamental change in tariff pricing in the Indian market over the next few years.

 

Sector watchers added that the tariff plan rejig could not be counted as an increase in the overall tariff base but rather a precursor to the impending round of tariff rises, last seen in 2024. “Rationalisation of plans by telcos does happen at regular intervals and does not constitute a formal tariff hike, though the move is nonetheless directionally positive for ARPUs,” said analysts at Citi Research.

 

“We are currently factoring in headline tariff hikes in late 2026 and view this as an advancement of these on select plans,” analysts at IIFL Capital noted. Earlier, they expected the next round of tariff hikes for the ongoing July-September quarter.