InvestorQ : What could be the outcome of the tariff hike by Vodafone, Bharti Airtel and Jio on the stock prices in the coming week?
Ria Jain made post

What could be the outcome of the tariff hike by Vodafone, Bharti Airtel and Jio on the stock prices in the coming week?

Answer
image
2 years ago
Follow

The increase is not coming for only one operator but across the board. So no one is likely to benefit in terms of users switching their operators. It will be a steady increased for all the operators relative to their user base in terms of Avg revenue per user getting high.

It's like when there is a hike in fuel prices, the rates don't charge for any retailer alone, it changes for all.

14 Views

image
Anu Biswas answered.
2 years ago
Follow

The pressure on numbers was plaguing the telecom companies for quite some time and the tariff hike has hardly come as a surprise. Here is what you need to know.

· The overall tariff hike will range from 10% on the lower side to 45% on the upper side with pre-paid connections taking the biggest hit.

· The idea is to reduce the number of small customers as the cost of servicing these customers is higher than the yield.

· While the tariff hikes of Bharti and Vodafone will take effect from 02nd December, the tariff hikes of Jio will take effect from 06th Dec.

· For Bharti and Vodafone, these tariff hikes are part of their effort to partially recover the steep AGR charges that they need to pay.

· The impact on demand and usage is not clear but Indian markets are known to be very price sensitive. Hence it would be early to judge the impact.

· The entire effort is to improve the ARPUs. If, after these tariff hikes, the ARPUs do not go up, then the entire purpose of the tariff hike would be defeated.

Sentimentally, this is likely to be positive for the telecom companies although Reliance Jio with its already profitable model will be the big beneficiary of this move.
13 Views