Vodafone gave an indication that it may soon be raising tariffs during the company’s conference call for the third quarter for fiscal year 2025.
Akshaya Moondra, CEO of Vodafone Idea (Vi) said a tariff hike may be in the offing to help the industry recover cost of capital. This will be the second time after July 2024, that the telco considers raising prices.
While he agreed that a one-year gap is ideal for tariff hikes in a normal scenario, Moondra pushed for a revision in prices within nine months of the last tariff hike. He expected next year’s ARPU growth to be impacted accordingly.
In June 2024, the tariff hikes announced by India’s major telcos shook many users, nudging many to switch over to more affordable plans offered by Bharat Sanchar Nigam Ltd (BSNL). As it turns out, customers have since returned to the private players. However, on Wednesday, Vi announced that the industry will likely move towards another tariff hike in 2025.
“The private mobile operators announced a tariff hike in July 2024 after more than two years since last price increase, leading to improvements in ARPU and revenue. However, despite these gains, the industry’s return on capital continues to remain low. Further, the telecom sector requires significant investment to support the emerging technology and rapid increase in data consumption. Therefore, further tariff increase is necessary to help the industry recover its cost of capital and sustained future growth. . A pricing model where any data users contribute more to higher usage is optimal for the industry,” said Moondra.
Regarding the consumer migration to BSNL, Moondra said that consumers have now returned to Vi. In terms of the impact of BSNL, the impact is completely reversed.
“In the interim, there has been a period of loss. There are some subscribers who have preferred to stay with BSNL, not that everyone is coming. But I think the gains which BSNL had, have now reversed,” said Moondra.