According to company insiders and analysts, the move is largely driven by changing user habits towards higher data packs. But it’s also a push by telecom operators to boost average revenue per customer, or Arpu, a key telecom industry metric.
The changes in the entry-level plans by the market leaders indicate the possibility of another increase in headline tariffs shortly, analysts said.
For Jio users, the entry-level recharge plan continues to be available through shops and offline partners, but for Airtel users, the plan is being completely shelved, according to people in the know.
The Reliance Industries-owned telecom operator offered a ₹249 plan with 1 GB per day data and a 28 day validity. Airtel’s entry-level tariff plan with a validity of 28 days offered 1 GB per day for ₹299. Airtel also offered a ₹249 plan with a validity of 24 days with 1 GB data.
“The product (is) closing tonight,” Airtel said on its website.
Vodafone Idea offers a similar ₹249 plan and a ₹299 plan with 1 GB data per day, including free 5G as an introductory offer at the moment. Vodafone Idea’s entry-level plan was listed on the website at the time of publishing this article. Queries emailed to the company did not elicit any response.
The recharge plans of Vodafone Idea and Airtel were priced at a 20% premium compared with Jio’s earlier plan. With Jio removing the entry-level ₹249 plan online, its ₹299 plan would still offer 1.5 GB per day data, as compared with 1 GB per day by its peers.
“The move to rejig the tariff plan is a routine exercise and is driven by change in demand towards plans with higher data allowance such as 2 GB plus,” an executive at a telecom company said.
Proxy tariff hike
Earlier, in the absence of 5G, daily 1-1.5 GB data plans were in demand. With 5G, there is a huge increase in data consumption and therefore it does not make sense to continue with unpopular plans, the executive added, declining to be identified.
“The move is indicative of telcos’ pricing power to boost Arpu even without taking an explicit tariff hike—this could also be indicative of probable monetisation of 5G plans in the next 1-2 years,” JM Financial analysts said in a note on Tuesday.
As of June-end, Jio’s subscriber base of 498 million included 213 million 5G users. Bharti Airtel’s subscribers were at 363 million, including 153 million on 5G.
As per JM Financial, 20-25% of Jio’s subscribers are likely on 1GB/day plan, which could lead to Jio’s Arpu rising by ₹11-13/month, or 6-7%. For Airtel, 18-20% of its subscribers are likely on 1GB/day plan, which could lead to its Arpu rising by ₹10-11/month, or 4-4.5%.
For Vodafone Idea, the 1GB/day plan users are expected to be 20-25% of its 198 million subscribers.
As of June-end, Jio’s Arpu was at ₹208.8 a month, lower than Airtel’s ₹250.
In the June quarter, the average data consumption on Jio’s network rose to 37 GB per user per month from 30.3 GB in the same year-ago period. For Airtel, the average data consumption rose to 26.9 GB from 23.7 GB.
“We see the current move as one which would reinforce industry repair and continued focus on monetization either inorganically (through tariff hikes) or organically (through tweaking pricing of the plans/data benefits/validity period),” Morgan Stanley said in a note dated 18 August.
The brokerage expects a 15% tariff hike for 4G/5G prepaid plans in FY27. It, however, said the removal of entry-level tariffs may not lead to a significant improvement in Arpu for the companies, given room for downgrades from some consumers as well as limited percentage of overall subscribers sitting on any one plan.
A strategic adjustment
Analysts at brokerage house Macquarie see the first move by Jio to discontinue the tariff as a way to close the gap with Bharti Airtel, with a focus on premiumisation.
According to analysts at ICICI Direct, Jio’s move should drive up overall Arpu by 2-3% for the company. Axis Securities expects a 4-5% increase in Jio’s FY26 revenue.
Reacting to the news of Jio removal of the entry-level prepaid plan, shares of parent Reliance Industries ended 2.8% higher at ₹1,420.4 each on BSE on Tuesday. Bharti Airtel shares ended 1.1% higher at ₹1,912.90 each. The company notified the discontinuation of its entry-level plan after market hours.
Telecom operators in July last year raised tariffs after a gap of over two years. Reliance Jio took the lead in raising tariffs between 12% and 25%.
“Like the previous hikes where telcos tend to follow suit, this time too Bharti and VIL (Vodafone Idea) should follow Jio’s suit,” Axis Securities said in a note dated 18 August. . “Additionally, telcos are usually supportive of hikes as Bharti advocates for tariff repair, VIL’s financial issues will be aided by Arpu uplift, and data usage in India continues to rise making lower-tiered plans redundant.”
According to analysts at JM Financials, a near-term tariff hike can’t be ruled out given Jio’s potential listing plans and the Central government’s intent to ensure a bigger market.
“The decision to pull its entry-level plan from online recharges, while keeping it active in offline channels, appears to be a strategic adjustment rather than a complete withdrawal,” said Murtuza Kachwala, managing director at Protiviti Member Firm for India.
“From a telecom business standpoint, such a move can serve dual objectives: encouraging digitally savvy customers to migrate to higher-value packs, thereby improving Arpu, while still ensuring that price-sensitive segments—particularly those more reliant on physical retail networks—continue to have access.”
