Mobile bills to get expensive soon

With the new year coming in, users may soon see new prices for their prepaid and postpaid mobile plans as telecom operators are expected to increase rates. Reports suggest that to increase revenue and margins for businesses, telecom giants like Jio and Airtel will switch and increase the prices of their existing plans by 10 per cent.

According to a report by Jefferies analysts (via Business Insider), telecom carriers, including Jio and Airtel, are expected to announce a 10% rate hike over the next three years, meaning in the fourth quarter of fiscal year 23, fiscal year 24 and fiscal year 25. This means that users will see an increase in the prices of mobile plans every fourth quarter of the next few years.

The report further suggests that increasing pressure on companies' revenues and margins is likely to cause the price increase. The average revenue per user (ARPU), a crucial indicator of a telco's performance, increased moderately for Airtel, Vodafone Idea and Jio in the third quarter. And with more price increases, ARPU will see a significant increase.

In particular, Airtel has already started increasing the rate on some of its plans. In addition, the telecom operator has also begun to phase out some cheaper plans, including the recent withdrawal of the Rs 99 plan. The plan has been launched in selected areas in the company's rural expansion. The prepaid plan offered 1 GB of data, 100 messages, Airtel Xstream access, Wynk Music and Zee5 Premium for 18 days. It was available to users in selected circles, including Chhattisgarh, Bihar, Jharkhand, Odisha, West Bengal, Rajasthan, and UP East. However, Airtel scrapped this plan after witnessing lower profit margins. Instead, Airtel reintroduced the plan with a price increase. The Rs 99 plan is now available at Rs 155.

Meanwhile, the revenue is also based on subscribers. And in the last few months, Airtel and Jio saw a significant increase in their subscriber base. This further fueled the ongoing competition between the two telecom companies to attract more users. On the other hand, Vodafone Idea (Vi) experienced a loss of subscribers and, for the same reason, is doing its best to attract users by offering plans with better value compared to its competitors.

Even the ongoing expansion of 5G has had a massive impact on Vodafone Idea's subscriber base. While Jio and Airtel have already started rolling out their 5G network connectivity, Vi, on the other hand, is facing financial issues with the launch of fifth-generation network connectivity. Jio and Airtel, on the other hand, are rapidly covering most of the Indian cities and aim to roll out 5G PAN in India within 1-2 years.