Increasing Airtel rates in Haryana and Odisha is a good move 

The industry urgently requires tariff corrections for growth, and Bharti Airtel has never shied away from them. According to a report from ICICI Securities, Bharti Airtel has started testing out a new price in two of its circles: Haryana (B Circle) and Odisha (C Circle)

Earlier, ICICI Securities expressed concern about the 5G CAPEX’s declining Free Cash Flow generation and the telco’s reduced possibility of raising prices in the market’s competitive environment.

In the Haryana and Odisha circles, where the telco has eliminated its entry-level minimum recharge pack of Rs 99, which used to be good for 28 days, Airtel has selectively implemented a Tariff Hike, according to ICICI Securities. Customers who purchase the Rs 99 Pack receive 200MB of data and 99 Talktime. In these two circles, the entry-level minimum recharge pack now costs Rs 155 and includes unlimited talk, 1GB of data, and 300 SMS messages. According to ICICI Securities, this rate revision by Airtel goes above and beyond their worst-case scenario. a 57% increase in the price, where the recharge plan still meets the needs of customers where affordability is most important.

Since the Rs 99 recharge pack has been discontinued, all of Airtel’s plans now solely provide unlimited phone service, just like Reliance Jio.

This is a planned move by Bharti Airtel, according to ICICI Securities, to gauge consumer reaction in Haryana (B Circle) and Odisha (C Circle), as this pack primarily targets 2G subscribers without affecting its 4G clients. In its report, ICICI Securities also observed that Bharti is prepared to walk the walk on tariff increases and that this tariff intervention is also a signal to the competition.

The worries raised earlier by ICICI Securities have been allayed by this tariff increase, resulting in a revised target price of Rs 970 for Bharti Airtel, up from Rs 875.

Additionally, ICICI Securities stated that it prefers smaller, more regular tariff increases to a single, significant increase since they would give consumers time to adjust to the higher costs and prevent inflation.

Bharti Airtel has reportedly implemented a pricing increase as the first industry effort, taking into account the state of the market and anticipating competition.

If the competition similarly raises rates to Airtel, this should put the Indian telecom industry in a very different position than its international counterparts, which have revenue that is only slowly increasing and depressed (and falling) Return on Invested Capital (RoICs), according to ICICI.