In a widely anticipated move, India's second-largest service provider, Bharti Airtel, has announced it is raising prepaid tariffs for all plans by 20-25% starting November 26, 2021.

"Bharti Airtel has always maintained that the mobile average revenue per user (ARPU) needs to be at INR200 [$2.68] and ultimately at INR300 [$4]," says the Airtel statement.

"We also believe that this level of ARPU will enable 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.

Figure 1: Leader of the pack: Bharti Airtel is the first to raise tariffs – but it's unlikely to be the last.
(Source: Steve Jurvetson on Flickr CC2.0)

As per the revised tariffs, the current INR79 ($1.06) will cost INR99 ($1.32); the INR149 ($2) plan will now cost INR179 ($2.4); the INR1,498 ($20) will now be INR1,799 ($24.16) and the INR2,498 ($33.55) will now be available for INR2,999 ($40.28).

The rates of top-ups have also gone up correspondingly. Gopal Vittal, Airtel's CEO (India and South Asia), had recently mentioned that current tariffs are unsustainable, and that they needed to increase from the current INR153 ($2.05).

According to the company's recent results, Airtel added 2.24 million new users to reach 323.47 million subscribers by the end of Q2 2021.

Jump on board

Led by Airtel, Reliance Jio and Vodafone Idea are also likely to hike tariffs. Airtel may increase rates for post-paid plans as well – the operator has been warning a tariff hike was likely for some time now. The last increase was in 2019.

India is one of the most competitive telecom markets, making it tough for telcos to increase tariffs. At the same time, service providers are reeling under massive debt and financial stress, making it imperative for them to work toward increasing the ARPU.

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This is important as service providers also need to generate funds for the upcoming 5G auctions, and invest in network upgrades and modernization to offer 5G use cases.

After Airtel, Vodafone Idea is most likely to be next to raise prices – the company is also under massive debt. It remains to be seen if Jio will join them.

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— Gagandeep Kaur, contributing editor, special to Light Reading