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India's Vodafone Idea goes for a tariff hike

Vodafone Idea has unveiled higher prices for two of its postpaid plans.

The Indian operator's 598 Indian rupees (US$8.12) plan will now cost INR649 ($8.81) a month, while the INR749 ($10.10) plan is priced at INR799 ($10.80).

Bigger rival Bharti Airtel is likely to follow Vodafone Idea's footsteps in increasing tariffs. It has already indicated its willingness to lift prices despite a reluctance to lead the way.

"We have signaled that we want the tariffs to go up," said Gopal Vittal, Airtel's CEO, on a recent earnings call.

Reliance Jio, the market leader, is already providing services at a lower rate than Airtel. That gap could increase, with implications for customer numbers and usage, if Airtel does decide to copy Vodafone Idea.


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It remains unclear if Vodafone Idea plans to increase prices of prepaid plans as well. Postpaid subscribers are usually more loyal and less prone to switching providers if tariffs change. Fiddling with prepaid rates could be much riskier.

Vodafone Idea is also in a precarious position and has much more to lose than Airtel. The indebted firm's networks are waiting for an upgrade and it has been hemorrhaging subscribers for the last year.

Its market share dropped from 32% in August 2019 to 26.15% in August 2020, according to data released by the Telecom Regulatory Authority of India (TRAI).

It also has the lowest average revenue per user (ARPU) in the industry and owes about $7 billion to the government authorities in licensee fees over the next ten years.

Fitch Ratings, an agency, expects Vodafone Idea to lose around 50-70 million subscribers in the next year, with Jio set to benefit.

With its lower tariffs, the market leader is in a strong position to acquire a chunk of Vodafone Idea's business.

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— Gagandeep Kaur, contributing editor, special to Light Reading

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