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Mobile bills to go up 40%, data usage not affected as Jio, Airtel, VodafoneIdea jackup tariffs

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New Delhi, Dec 2, 2019 –

About 100 crore mobile phone users will cough up at least 40 per cent more on their mobile bills from this month onwards with all the top three telcos – Reliance Jio Infocomm, Bharti Airtel and Vodafone Idea jacking up tariffs for the first time since September, 2016 to build up finances, pay huge pending dues to government and shore up their lowest average revenue per user (ARPU), but there will be no reduction in the usage of data while voice calls may lose out to app-based calling, analysts said.

There have been major slab changes and introduction of new plans with higher amounts in the hikes announced on Sunday which will have direct impact on low end consumers. Now the minimum recharge is Rs 49 from the earlier Rs 35. There will also be an additional 6 paise minimum charge after a limit as per Fair Usage Policy on calls made to a different network.

Financial services firm India Infoline said it is time consumers pay up more for data usage and with the usage of data penetrating into lives like basic staple, its usage wont be reduced even with higher bills by the consumers.

“It is about time the consumers started to pay more data. Its like a tobacco, you can’t let go of it. So it is an inelastic price hike, the first will be painful, they will remit out with little bit of freebies, but now the consumers have to pay. He has had the best times in the last two years.

“Definitely, it will start to pinch a bit and surely on the cards. But even with the hike the data consumption is here to stay. These small tinekrings will not have that much of impact but will surely rev up the bottomlines of the ailing sector and the banks which are collateral to lending”, Sanjiv Bhasin, Executive VP-Markets & Corporate Affairs, IIFL India, told IANS.

Some analysts also do feel voice calls will be impacted and app-based calling will be used more to lessen the mobile bill.

ALSO READ: Jio plans could be 20% cheaper than other telcos: Report

Bhagyashree C. Bhati, Research Analyst at CARE Ratings told IANS: “To an extent it will have an impact. If three telcos have raised the tariffs, obviously it will have an impact and consumers will pay more but terms of data usage will have no impact out of this hike. But with respect to calls there will be problems but data consumption will not be affected in any manner. I see people making more WhatsApp calls or app based calls more due to the hikes.”

In its note, broking firm Jefferies said: “Elasticity with hike geared towards data subs, ARPU impact will depend on level of data elasticity. We highlight trends that drive our view of high elasticity — OTT providers indicate consumers rarely top up data packs to continue watching shows.

“DTH has faced wallet issue historically. Global cross-country trends indicate high elasticity of data usage to pricing. India mobile ARPU as a percentage of income is above global average, indicating limit to wallet size. Anecdotally, this is reflected in recharges, where a substantial portion (30 per cent) are on monthly bundled plans despite recharges being cheaper.”

Bank of America and Merril Lynch said it does not expect major negative elasticity.

“As all telcos are looking to raise tariffs at almost same magnitude, we do not see any negative elasticity impact. In the past we saw negative elasticity as consumers had option to switch to other telcos. Besides, before Jio launch consumers were paying average of Rs 180-200/month which has gone down to Rs 120/month.

“Closest analogy of telco tariff hike could perhaps be fuel price increase – where we see a month or two of low demand before usage picks up again. We expect more tariff hikes to follow and remain bullish. We consider Bharti and RIL as better telco names that benefit from tariff hikes and remain bullish. While VIL may show maximum upside, the overhang from the AGR issue does not make its risk-reward favourable”, it said in a note.

Telecom tariffs were hiked on average 25-30 per cent and upto 40 per cent by the three telcos — Airtel, Vodafone and Jio — on Sunday but but no plans yet from Jio.  (Agency)

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