Why Reliance Jio raising tariff is good news for Airtel, Idea, Vodafone

Mumbai: Mukesh Ambani-owned Reliance Jio’s decision to hike tariff by 15 to 20 per cent has possibly finally given incumbents like Bharti Airtel, Vodafone India and Idea Cellular the much–needed breathing space to raise their prices, say analysts.

Reliance Jio customers will have to pay 15 per cent more for its popular 84-day plan at Rs 459 from October 19 , under which subscribers get 1GB 4G data at high speed per day. According to Swiss brokerage UBS, “The price increases are positive for the sector and incumbents, who had generally followed Jio’s prices in the past six months and will now likely be able to raise prices as well” reported Economic Times.

This price hike is being considered as a big positive for Airtel, Vodafone and Idea as Jio has been viewed as “disruptor” in the Indian telecom industry for offering rock-bottom prices. Now, these incumbents can increase their rates after competing with Jio’s inexpensive plans for the last few quarters.

The Economic Times quoted the Deutsche Bank saying Jio’s pricing trends “suggest a progressive normalisation of sector pricing, which was significantly impacted by its free launch offer in September 2016”.

Reliance Jio’s hike in prices comes days after the telecom posted a loss of Rs 270.5 crore for the quarter ended September 2017, against Rs 21.3 crore loss in the preceding June quarter.