Starting from July 3, all three major telecom companies in the country will be increasing the rates of their recharge plans, impacting consumers' wallets. Reliance Jio is set to roll out new rates for its prepaid and postpaid plans, with a 20 to 22 percent increase in the rate of the old unlimited recharge plan. Additionally, the company is imposing limits on unlimited free 5G data. Following suit, Airtel has also announced plans to increase their rates, which will also take effect from July 3.
In response to these price changes, the third major telecom player, Vodafone-Idea (Vi), is considering increasing its recharge plan rates as well. Reports suggest that the new rates for Vodafone-Idea may also come into effect from July 3. Last month, Vodafone-Idea's CEO, Akshay Mundra, indicated that if competitor companies increase the average revenue per user (ARPU), Vodafone-Idea may follow suit and raise its plan rates.
The Competition to Increase ARPU:
Akshay Mundra stated that there has been a price recovery in recent years. Currently, Vodafone-Idea is experiencing significant losses and a reduction in its user base due to a lack of network expansion. Increasing the average revenue per user would enable telecom companies to recoup the expenses incurred in network expansion and upgrades. Airtel's Chairman, Sunil Mittal, has also voiced support for raising the average revenue per user of telecom companies from Rs 200 to Rs 300. However, the expensive plans of telecom companies imply an additional burden on users' pockets every month.
Cost Recovery for Network Upgrades:
In the recent 5G spectrum auction, Bharti Airtel acquired 97 MHz spectrum worth Rs 6,856 crore. On the other hand, Reliance Jio participated in the auction and acquired 14.4 MHz spectrum, incurring an expenditure of Rs 973 crore. Meanwhile, Vodafone-Idea bid for 50 MHz spectrum, which will require an expenditure of Rs 3,510 crore. It has become crucial for telecom companies to raise ARPU in order to recover the costs associated with upgrading network infrastructure.
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