Home Featured Connectivity Inflation: Why Airtel And Vi Have Increased Their Tariffs Up To 25 Percent?

Connectivity Inflation: Why Airtel And Vi Have Increased Their Tariffs Up To 25 Percent?

by Shatakshi Gupta

After Airtel, Vi has also announced to hike the rates of its prepaid plans. The new prices have also been kept almost the same. Now customers of both these companies will have to pay up to 25% more money for the same recharge. Customers will have to spend Rs 20 more for the cheapest plan and Rs 500 more for the longest plan.

Both the companies announced new prices at a difference of one day. The new prices of Vi will be applicable from November 25 and that of Airtel from November 26.  As of now, there are around 106 crores 4G users in India. Out of which Vi and Airtel have a user base of 62 crores. Quoting differently, 58.5% of the country’s users are going to be affected by the new announcement. Airtel has 350 million users and Vi has 270 million users. The percentage of users keeps on fluctuating. In the backdrop of this decision, let us understand why these companies have increased their tariffs.

Companies are Debt-ridden

Bharti Airtel and Vi India are in huge debt. Airtel had a debt of Rs 93.40 thousand crores as of March 2021. On the other hand, Vodafone Idea had a debt of Rs 1.90 lakh crore till the June quarter. These loans include Adjusted Gross Revenue (AGR) and other loans.  The Supreme Court on the AGR matter has given 10 years to all the telecom companies to clear the dues. Airtel has raised Rs 21,000 crore through a rights issue in October. On the other hand, Vodafone is planning to raise 20 thousand crores from last year, but so far it has not got investors.

Read more: What is 5G Technology? Connectivity and Speed Explained

Companies want to earn higher revenue

Telecom companies want to increase the Average Revenue Per User. As a result, it will help them to deal with the crisis. At this juncture, even the banks are reluctant to issue any big loans. Airtel leads in earnings per subscriber with Rs 155. The company has the target to take it to Rs 180 by January 2022. With this decision, Airtel’s per subscriber earnings will be Rs 165. Similarly, Vi’s revenue per customer is Rs 109. After this decision, Vi will also get 10 rupees extra from all the users on average.

It is clear from the new prices of the old tariff plan that the Average Revenue Per User of both the companies will increase. If the user takes the cheapest plan of these two companies, then he will have to spend 20 rupees more. That is, the company will have a direct profit of Rs 20.

A quick comparison between 3 telecom giants of India

If we compare the prepaid plans of all the three companies, viz, Jio, Airtel and Vi then Jio is the cheapest. After November 25, the plans of Vi India and Bharti Airtel will be almost identical. Jio is Rs 24 cheaper than Airtel and Vi in the cheapest plan. At the same time, if we talk about the annual validity plan, Jio is Rs 500 to 600 cheaper than both the companies.

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