Why did Reliance Jio, Airtel and VI Increase the Price of Tariff Plans?

Tariff Plans: India's big telecom companies have increased the problems of the people by increasing their prepaid and postpaid plans one after the other. First Reliance Jio, then Airtel, and then VI have announced an increase in tariff plans. The increased prices of Reliance Jio and Airtel have come into effect from today i.e. July 3.

At the same time, the prices of Vodafone Idea (VI) will come into effect from tomorrow i.e. July 4. In such a situation, many people are not able to understand why the telecom companies have increased the prices of their plans together and what could be the reason behind it.

Talking about the increased prices, Reliance Jio has increased its tariff by 12 to 25 percent. At the same time, Airtel has increased the prices of the plan by 11 to 21 percent, while VI has increased its tariff by 10 to 21 percent.

The reason behind the increased Tariff Plans

SIMs of these three companies are used by crores of users in the country. The increase in recharge prices is going to affect the pockets of crores of people. Telecom companies have given many reasons behind the price hike. For example, Airtel said that higher tariffs will improve both quality and coverage, while Jio's entire focus is to boost average revenue per user (ARPU).

Apart from this, the monetization of its 5G services has to be started. This means that the free unlimited 5G service being provided to Jioand Airtel users for the last several months will also stop after a few days and then users will have to buy 5G tariff plans to use 5G services. The companies also say that whatever profit is made by increasing the tariff will be used in 5G technology.

What is ARPU?

All three companies have cited ARPU as the main reason behind increasing the prices of the plan. ARPU is an important metric that is used by dividing the total revenue of a telecom operator by its total number of users or subscribers. To be financially sustainable, mobile ARPU should be more than Rs 300.

Looking at the ARPU of the three companies till March 2023, Airtel's ARPU was Rs 209, Jio's ARPU was Rs 181.70 and Vodafone Idea's ARPU was Rs 146. The tariff hike is expected to increase ARPU by 15 per cent to Rs 220 in FY25, while it was just Rs 191 in the previous fiscal.