Bharti Airtel on Monday increased its minimum tariff for prepaid users to ₹99 from ₹79, paving the way for other telcos such as Reliance Jio and Vodafone-Idea to follow suit.

The new tariffs will come into effect from November 26, Airtel said in a statement.

Shares of Airtel closed higher at ₹742.05 a piece on the BSE on Monday, up 3.90 per cent from the previous close.

New minimum

Airtel’s unlimited plans now start at₹179 ( ₹149 earlier) for 28 days in which the customer will get unlimited calling, 100 SMS/day and 2 GB data.

At the upper end, the maximum tariff is ₹2,999 (from ₹2,498 earlier) with a validity of 365 days, unlimited calling, 100 SMS/day and 2GB/day data.

Financially healthy model

The telco has consistently maintained that the mobile ARPU (average revenue per user) needs to be at ₹200 and ultimately at ₹300, so as to provide a “reasonable return on capital” that allows for a financially healthy business model.

“We also believe that this level of ARPU will enable the substantial investments required in networks and spectrum.

“Even more important, this will give Airtel the elbow room to roll out 5G in India,” the telco said.

The other categories where a hike has been announced are unlimited voice bundles and data top-ups.

The company is hiking tariffs on this scale after a long time, although it had started the revisions since July when it discontinued the ₹49 prepaid recharge.

According to analysts, this tariff hike was long overdue and is the first step towards ‘ARPU repair’ for Airtel as well as the industry.

“We expect Vodafone Idea and Reliance Jio, to follow suit with tariff hikes on prepaid plans. This move should be positive for all key incumbents, including Indus Towers,” said Ankur Rudra at JP Morgan.

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