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Airtel tests market for higher tariff plans

Airtel has initiated a bold move in the market by increasing its base tariffs by 57 per cent in two circles, which could be a test ahead of a pan-India hike.

The operator has withdrawn its entry plan of ₹99 recharge coupon, which used to be valid for 28 days, in Haryana and Odisha. Now, the minimum recharge pack in the two circles is priced at ₹155, which offers unlimited voice, 1GB data and 300 SMSs.

“Bharti has, thus, taken a calculated risk to check how customers respond, and this pack is largely being sold to 2G customers only. It does not impact the remunerative 4G customers. Besides, peers cannot take advantage of the situation to poach its 4G customers. Previously, the company did a similar exercise (market-testing) when it increased its minimum recharge offer from ₹79 to ₹99 in select circles in CY21,” said analysts at ICICI Securities in a report.

“If the competition follows Bharti in effecting price hikes, the industry will have established a massive pricing power, which has not been seen in the past 10+ years,” it added.

Morgan Stanley Research said that though a potential increase in tariff would be much liked by peers as well, “we see challenges as competition (VIL) is already seeing a higher churn, while Rjio’s most comparable plan shows differential of only 20 per cent (₹125 versus ₹155), and if one were to adjust for the additional cost of Jiophone handset, the differential comes down even further, making the case of an increase potentially weaker.”

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