India’s second largest telecom operator Bharti Airtel on Friday announced a hike in mobile tariffs by as much as 10-21%.

This was followed by Reliance Jio’s recent hike unveiling a series of new unlimited plans with effect from 3 July 2024.

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Sunil Bharti Mittal’s telecom firm said it will revise mobile tariffs from 3 July 2024, with a very modest price increase of less than 70 paise per day on entry-level plans.

Bharti Airtel maintained that the mobile telecom service Average Revenue per User (ARPU) needs to rise above Rs 300 for the financial health of the telecom businesses in India.

“We believe that this level of ARPU will enable the substantial investments required in network technology and spectrum and offer a modest return on capital,” Airtel said in a statement.

Bharti Airtel also said that the company welcomes the industry announcement to ‘repair tariffs’.

Once the new tariffs go into effect, Airtel prepaid customers will have to pay more to access the company’s data and calling plans.

On Thursday, Jio announced an increase in tariffs across segments, excluding feature phones, starting from base-level prepaid monthly packs to annual packs in the range of 13-25%, while the hike in postpaid plans is in the 13-17% range.

Additionally, the minimum monthly plan required to avail unlimited 5G data has also been raised from Rs 239 to Rs 349.

On the Jio’s move, JP Morgan said that a 5G tariff hike will help Jio more given higher 5G coverage and availability at three times of Bharti Airtel.

Analysts at BofA Securities said this round of tariff hikes would lead to improvement in the telecom sector cash flows and return ratios for all companies.

“Vodafone Idea will be the biggest beneficiary of the tariff hike, as it is a pure-play mobile operator, followed by Bharti Airtel and then RIL,” it said.

Further, the Jefferies also said that Jio’s limited participation in the spectrum auctions suggests that its focus on network monetisation is rising and its initiative on raising tariffs suggests that it is more confident that its subscribers are unlikely to churn out.