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 Jio and Airtel have come into effect from July 3.
At the same time, the prices of Vodafone Idea (VI) will be applicable from today 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.
If we talk 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 plans by 11 to 21 percent, while VI has increased its tariff by 10 to 21 percent.
Reason behind the increased prices
SIMs of these three companies are used by crores of users in the country. Due to the increase in recharge prices, the pockets of crores of people are going to be affected. Telecom companies have given many reasons behind increasing the price. For example, Airtel said that high tariffs will improve both quality and coverage, while Jio’s entire focus is to boost the average revenue per user (ARPU).
Apart from this, it has to start monetizing its 5G services. This means that the free unlimited 5G service that Jio and Airtel users have been getting for the last several months will also stop after a few days and then users will have to buy a 5G tariff plan to use 5G service. The companies also say that whatever profit will be 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 plans. ARPU is a key metric that is used to calculate the total revenue of a telecom operator by dividing it by the total number of its users or subscribers. To maintain it financially, the mobile ARPU should be more than INR 300.
If we look at the ARPU of the three major telecom companies till March 2023, Airtel’s ARPU was INR 209, Reliance Jio’s ARPU was INR 181.70 and Vodafone Idea’s ARPU was INR 146. The tariff hike is expected to increase ARPU by 15 percent to INR 220 in FY 2025, whereas in the previous financial year it was only INR 191.