Analysts suggest that Bharti Airtel's decision to discontinue several prepaid plans might prove more advantageous for its competitor, Vodafone Idea, than for the second-largest telecom company itself.
According to a JM Financial report, the discontinuation of Airtel plans priced at ₹299, ₹319, ₹579, and ₹619, which offered 1.5 GB of data daily, as well as the ₹649 plan with 2 GB of daily data valid for 56 or 60 days, could potentially increase Airtel's Average Revenue Per User (ARPU) by ₹5–6, or about 2 percent, compared to the Q1 FY27 ARPU of ₹264. This assumption is based on approximately 10 percent of all Airtel subscribers migrating to new, higher-priced tariff plans by ₹50.
Broking firm analysts noted that if Vodafone Idea follows suit and implements a similar tariff adjustment, it could boost its ARPU by ₹7–8, or around 4 percent, compared to the Q1 FY27 ARPU of ₹177. Furthermore, this could lead to an approximate 2 percent increase in EBITDA for FY27 and a 3 percent rise in valuation, provided 15 percent of its subscribers switch to a more expensive plan.
IIFL Capital analysts pointed out that Vodafone Idea faces interesting options: the company can either emulate its competitor or use the current period before major tariff hikes to increase market share among subscribers who use VI as a secondary SIM and might convert it to primary, or adopt a phased rollout strategy city by city.
JM Financial estimates that around 128 million subscribers, constituting 35 percent of Airtel's total subscriber base, use plans offering 1 GB or 1.5 GB per day. It is worth noting that every ₹5 increase in ARPU boosts Airtel's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) in FY27 by ₹1200 crore, or approximately 1 percent.
Meanwhile, Morgan Stanley stated that the company promoted by Sunil Mittal could see a gross ARPU increase of ₹8–12 if 20–30 percent of its mobile subscribers in India switch to the ₹349 plan.
It is reported that Airtel discontinued these plans as early as Wednesday, while Vodafone Idea or its major competitor Reliance Jio has not made any statements or changes to its tariff plans. Operators continue to adjust their offerings, encouraging prepaid customers to opt for more expensive prepaid and postpaid plans while keeping core tariffs unchanged. Earlier last year, in August, Airtel removed its starting plan of ₹249 with 1 GB daily for 28 days from online platforms, making the ₹299 plan with 1.5 GB daily the entry-level option.
The management of the second-largest company insists that data-intensive customers should pay more, and that unlimited data plans distort the industry's pricing structure. Airtel Executive Vice Chairman Gopal Vittal stated during the company's earnings call last week that fundamental changes in Indian market tariff pricing are required over the next few years. He emphasized: 'The most important thing is to restore the pricing architecture, meaning that getting unlimited traffic at a very low price limits the ARPU (average revenue per user per month). This is an unhealthy business model.'
Sector observers added that tariff revisions should not be seen as an expansion of the overall tariff base, but rather a precursor to an upcoming round of tariff increases, the last of which was observed in 2024. Citi Research analysts noted: 'Telecom operators' plan rationalization occurs at regular intervals and does not constitute a formal tariff hike, although this move positively influences ARPU.'
IIFL Capital analysts also mentioned that they are currently factoring in the major tariff increase expected at the end of 2026 and view this as an acceleration of the process through individual plans.
