Will Jio Increase Their Plan Rates? Analysts Slam Such Move, Says Price Hike Not Required
Share prices of Airtel, Vodafone-Idea has increased due to such rumors.
Since October this year, rumor mills are churning out apprehensions about a possible tariff hike from Jio, and other telecom operators such as Airtel, Vodafone.
What is the truth here? Will Jio increase their plan rates?
Meanwhile, Jio has become 1st Indian telco to provide International roaming VoLTE services. What exactly this means?
Jio’s Plan Rate Hike: Truth Or Rumor
To be honest, no one knows at this point of time.
However, share market is excited due to these ‘rumors’ about a possible plan rate hike from Jio. And due to this news, shares of Airtel and Vodafone have spiked.
Last Friday, share prices of Airtel and Vodafone-Idea increased by 9.3% and 16.5%, respectively, based on rumors that Jio will likely announce a price hike in next month.
Increased tariff for Jio means that Airtel and Vodafone-Idea too can increase their plans, which means more profits to the share-holders.
But, it is the consumers who will suffer. As per rumors, Jio and other telcos may increase plan of bundled plans, and force users to pay more.
In October, Sanjiv Bhasin, Executive Vice-President, Markets and Corporate Affairs, IIFL,
Had said, “The days of freebies for mobile consumers may be finally coming to an end as the high cost of money is definitely hurting telcos and putting pressure, particularly on the incumbents, which should lead to some tariff hikes in the next two quarters.”
Even COAI, India’s most powerful lobby of telecom operators too supported that telcos need to increase price, but how much, that is not clear.
Rajan Mathews, Director General of the Cellular Operators Association of India (COAI) had said in October: “There’s no doubt that operators need to raise prices to make investments to improve quality of service amid a surge in voice and data usage.”
Experts Slam Such Rumors, Say Jio Need Not to Hike Any Tariff
After such rumors started impacting share prices, some analysts have slammed these rumors, and have said that Jio need not increase any price, as of now.
In an advisory note, analysts at Jefferies India Pvt. Ltd said, “It would be premature, in our view, to presume Reliance would lift tariffs soon given its clear intent for market leadership,”
Another unnamed analyst blamed Vodafone for these rumors, as they are seeking to raise $3.5 billion. He said, “The timing of the rumored move is suspect, especially given Vodafone Idea’s recent announcement of a $3.5 billion fundraising plan,”
Why Jio May Not Increase Plan Rates
Within 2 years, Jio has managed to cross 250 million subscribers mark, and captured 23% of the market. And this has mainly happened due to aggressive pricing and better services.
771 crore GB was consumed, even as only 0.66% of users left Jio last quarter.
Such massive numbers carry a special momentum, and disrupting this by increasing price may affect Jio in the long term.
We will keep you updated, as more details come in.