India's Jio, Bharti Airtel, Vodafone Idea hike call tariffs for first time in three years

FILE PHOTO: FILE PHOTO: A man stands next to the wall of a grocery shop painted with an advertisement for Bharti Airtel in Kochi

By Kashish Tandon and Hritam Mukherjee

BENGALURU (Reuters) -Reliance's Jio, Bharti Airtel and Vodafone Idea, India's three largest telecom operators, raised their tariffs for the first time in three years, aiming to begin recouping the billions poured into 5G technology over two years.

Bharti Airtel and market leader Jio said they would raise tariffs by 10%-21% and 13%-27%, respectively.

No.3 player Vodafone Idea said it would increase tariffs between 10% and 23% across seventeen prepaid and post-paid plans, effective July 4.

India is the world's second-largest smartphone market, but has among the cheapest tariffs. Jio's strategy of rock-bottom prices to lure subscribers meant its peers had to follow or risk losing out by raising prices.

While the companies have not raised tariffs since 2021, they have spent heavily on boosting their infrastructure and even more on acquiring spectrum, including 5G airwaves for the first time in 2022, a year after the last round of tariff hikes.

The 5G roll-out alone would have cost the companies around 1.5 trillion rupees (roughly $18 billion) but their return on investment will have been in single digits, estimated Balaji Subramanian, a research analyst at IIFL Securities.

Jio's price rise, its third in five years, should boost its average revenue per user (ARPU) by about 17% over the next year, Morgan Stanley said in a note dated June 27.

Jio's ARPU stood at 182 rupees in the January-March quarter. Bharti Airtel reported an ARPU of 209 rupees, a result of it switching strategy a few years ago to focus on higher-paying subscribers.

Vodafone Idea had the lowest ARPU at 146 rupees.

Vodafone Idea's shares closed down 3.4% on Friday, while Bharti Airtel closed down 2.2%. Jio-parent Reliance's shares closed 2.3% higher. ($1 = 83.4550 Indian rupees)

(Reporting by Kashish Tandon, Hritam Mukherjee and Ashna Britto in Bengaluru; Editing by Rashmi Aich, Savio D'Souza, Janane Venkatraman and Shounak Dasgupta)