A major telecom tariff hike remains on the cards for later this year, according to analysts, despite Bharti Airtel already raising effective prices by scrapping its ₹299 entry-level plan to push users towards higher-priced plans. The telecom operator also removed its ₹319 (30 days), ₹579 (56 days), ₹619 (60 days), and ₹649 (56 days) prepaid plans.
The move has put Vodafone Idea in the spotlight, forcing the cash-strapped operator to choose between following suit to improve its average revenue per user (Arpu) or holding prices steady to grab market share, analysts said.
“We believe this is an advancement of the next round of tariff hikes (expected in December 2026) on select plans. For now, we are not assuming that this tariff tweak is over and above the December 2026 expected tariff hike,” analysts at IIFL Securities wrote in a note dated 12 August. “The incremental benefit from the current move will thus be limited to four months of FY27, implying a potential FY27 Arpu uptick of ₹4,” they added.
Arpu is a critical operational metric for telecom operators, serving as a direct measure of per-subscriber revenue and their overall ability to monetise.
Bharti Airtel’s Arpu was ₹264 a month at the end of the June quarter. In comparison, Vodafone Idea’s Arpu was ₹177, market leader Reliance Jio’s was ₹215.8. In March, Bharti Airtel chairman Sunil Bharti Mittal said he remained very hopeful that the company would get to ₹300 Arpu, with an ultimate goal of ₹350.
By discontinuing its ₹299 plan (1 GB a day for 28 days), Airtel is effectively forcing subscribers into its ₹349 plan to maintain daily data—a 16.7% or ₹50 cost increase. The ₹349 pack offers 1.5 GB of daily data and unlimited 5G for 28 days, according to the company's website.
Changes to the 1.5 GB and 2 GB daily data plans will push subscribers toward either shorter-tenure plans, which effectively cost 20% more on a daily basis, or towards higher-data, longer-validity options, analysts at Morgan Stanley wrote in a note dated 12 August.
“This, in our view, is a focused attempt by Bharti Airtel toward higher monetization while capitalizing on customer preferences for higher-data plans,” the Morgan Stanley note read, adding that the move could boost the operator’s Arpu by ₹8-12 on a gross basis.
Estimated Arpu boost
Analysts estimate that 20% to 30% of Bharti Airtel’s Indian mobile subscribers were previously on plans priced below ₹349. Airtel’s domestic mobile user base stood at 376.5 million at the end of June (out of 492 million total subscribers).
Brokerage house JM Financial said if just 10% of these users upgraded to the ₹349 tier, it would boost the operator's Arpu by 2%. It also said Airtel’s move is not an across-the-board tariff hike and that a broader hike is overdue. “It must be viewed as plan modifications undertaken by telcos to push subs to upgrade to higher GB and higher Arpu plans,” they said.
In a like-to-like comparison, Jio currently has an entry-level plan of ₹299 plan with 1.5 GB of daily data for 28 days. Vodafone Idea has an entry-level plan of ₹299, in which it offers 1 GB per day data for 28 days, according to their websites. While Reliance Jio’s tariffs are generally priced at a discount to Airtel’s and Vodafone Idea’s, single-operator price changes historically trigger swift follow-up moves across the industry.
If Vodafone Idea matches Airtel’s price adjustments and 15% of its subscribers upgrade to higher-tier plans, the operator’s Arpu could increase by ₹7-8 (about 4%), according to analysts at IIFL Securities. The brokerage estimates this move would also boost Vodafone Idea’s FY27 Ebitda by 2% and lift its overall valuation by 3%. But some analysts said Vodafone Idea may choose not to follow Airtel and instead use this as an opportunity to migrate more subscribers from secondary SIM cards to primary ones.
This isn't the first time in recent months that an operator has quietly phased out a budget pack. Last August, Reliance Jio removed its entry-level ₹249 plan (1GB daily data) from online platforms, a move that was subsequently matched by Bharti Airtel and Vodafone Idea.
In July 2024, telecom operators implemented their first major tariff hikes in over two years, led by Reliance Jio's 12% to 25% price increase across plans. Over the past year, however, operators have taken opposing views on further price increases.