Summary:
Vodafone Idea faces a tariff dilemma as Airtel and Jio focus on raising ARPU through premiumisation and pricing changes. Vi's ₹195 ARPU remains well below Airtel's ₹264 and Jio's ₹215.60, increasing the need for higher tariffs to support network investment and its ₹45,000 crore capex plan. However, aggressive price hikes could trigger subscriber churn, making the timing and scale of any tariff increase crucial.
Vodafone Idea is facing a difficult pricing decision as Reliance Jio and Bharti Airtel increasingly focus on improving monetisation from their existing subscriber bases. For Vi, higher tariffs could provide much needed revenue growth and support network investment, but an aggressive increase could also put price sensitive subscribers at risk.
The issue has become more important as the telecom industry moves towards higher average revenue per user (ARPU), after the broad based tariff increases implemented in 2024. Recent industry expectations point towards another tariff increase, although the timing and size have not yet been formally announced by the major operators.
Airtel and Jio have a clear ARPU advantage
The gap between the three private operators remains significant. In Q1 FY27, Airtel reported mobile ARPU of ₹264, compared with ₹215.60 for Jio and ₹195 for Vi. Airtel therefore generates around 35% more revenue per user than Vi, while Jio remains comfortably ahead of its smaller rival.
Airtel has already started pushing monetisation without announcing a blanket tariff increase. It discontinued selected lower priced prepaid plans, including plans priced at ₹299, ₹319, ₹579, ₹619 and ₹649. The move encourages customers towards higher priced plans and could raise ARPU if users migrate upwards.
Jio has responded differently. It has reintroduced its Prime membership at ₹300, offering customers protection against tariff or plan changes until September 2027, while enhancing benefits under its ₹299 plan. This suggests that competition is increasingly shifting from subscriber additions towards pricing and customer monetisation.
Recent News: Airtel Withdraws ₹299 Prepaid Plan, Raises Minimum Spend
Vi needs higher tariffs, but cannot risk churn
Vi's problem is more complicated because it needs stronger cash generation to fund network expansion while simultaneously protecting its subscriber base. Its Q1 FY27 revenue increased 6% year on year to ₹11,689 crore, while the customer base increased to 193.1 million from 192.8 million. This was Vi's first quarter of positive net subscriber additions since the merger.
However, Vi's ARPU of ₹195 remains substantially below Airtel and Jio. Higher tariffs could therefore provide a meaningful improvement in revenue and cash generation, but losing subscribers in response would weaken the benefit.
The company is also seeking funding for a ₹45,000 crore capital expenditure programme, making tariff increases important for its ability to strengthen network coverage and compete more effectively.
Why is the tariff decision so important?
The industry has already started moving towards premiumisation. Airtel's removal of lower priced plans shows that operators can increase effective pricing even without announcing a uniform tariff hike.
For Vi, however, the trade off is sharper. It needs to improve ARPU while retaining customers who may be more sensitive to price increases. A tariff increase implemented across the industry would reduce the risk of subscribers switching purely because of price differences.
Vi's recent operational improvement provides some room for optimism. Its 4G and 5G subscriber base reached 128.9 million, while the share of these users increased to 66.9%.
Outlook
The telecom industry's next phase is increasingly about monetisation rather than simply adding subscribers. Airtel has already taken steps towards premiumisation, while Jio is protecting its customer base through pricing benefits. Vi now needs to balance both strategies.
For Vi, a successful tariff increase combined with continued subscriber stabilisation could materially improve its financial position. The key question is whether the company can raise ARPU without reversing the recent improvement in subscriber additions.
