Vodafone Idea hikes prices of two post-paid family packs

Vodafone Idea (Vi) has increased prices of two post-paid family packs by about Rs 50 in some circles, according to company notifications on customers' apps.

The tariff changes are unlikely to impact the telco’s revenue or its competitors Bharti Airtel and Reliance Jio, but could indicate that price increases are likely soon, analysts said.

“Vi is testing the waters with high-end post-paid plans and it is the tariff hike in mass market plans – the 56- and 84-day plans – which will be the game changer,” said Rajiv Sharma, head of research at SBI Caps.

Vi’s family packs worth Rs 598 and Rs 749 will now cost Rs 649 and Rs 799, respectively. The telco did not respond to ET’s request for comment.

The company’s shares rose 2.45% to Rs 10.05 at the close on the BSE on Tuesday, while shares of Bharti Airtel advanced 3.46% to Rs 479.35.

ET reported in its November 16 edition that loss-making Vi is considering increasing tariffs 15-20% by the end of the year or early next year to recover financially and stem customer losses.

If Vi increases its prices, Bharti Airtel may follow, while Jio may calibrate its rates keeping in mind its target to reach 500 million customers.

The country’s three private telcos previously increased rates in December 2019, the first time they did so since the entry of Jio in 2016.

Vi’s average revenue per user of Rs 119 at the end of the September quarter still lags that of Bharti Airtel (Rs 162) and Jio (Rs 145).

Vi MD Ravinder Takkar has said the present tariff rates are “unsustainable” and it would not “shy away” from being the first to increase them.

According to Deutsche Bank, Vi remains highly leveraged with Rs 1.7 lakh crore in net debt and statutory adjusted gross revenue dues, which is about eight times the company’s earnings before interest, tax, depreciation and amortisation.

Goldman Sachs said in a report that a tariff increase would help Vi as every Rs 10 added to ARPU leads to about $400 million of incremental cashflows.