Telecos hike plans by 25%, Shares show mixed reaction

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Brace yourself, as cost of your mobile phone bill is going to shoot up. From July, mobile recharge plans are becoming more expensive.

In India, there are three major telecom companies and all three have increased their recharge plans by up to 25%.

The increased tariff can be understood looking at their cheapest plans. Airtel’s Rs. 179 plan will now be available for Rs. 199. Vodafone Idea’s cheapest Rs. 179 plan is now Rs. 199 and Jio’s Rs. 155 plan will now be available for Rs. 189. All plans include unlimited calling, 2GB data, and different SMS limits.

Similarly, postpaid plans have also become more expensive. For example, Jio’s Rs. 299 postpaid plan will now cost Rs. 349. and the Rs. 399 plan will be available for Rs. 449. Meanwhile, 5G plans, which are considered premium broadband services, have also seen an increase in their prices.

For example, Jio’s 5G service now costs 46% more, whereas for Airtel, you’ll have to spend 71% more.

Let’s understand this with an example. Jio users will now have to pay Rs. 349 for the 2GB/day pack. Previously, this price was Rs. 239, and the data pack was 1.5GB/day.

Similarly, Airtel’s pack that was previously Rs. 239, which included 1.5GB/day data, will now cost Rs. 409. The new pack will provide 2.5GB data per day.

According to industry experts, mobile phone users may have to spend more than Rs. 47,000 crore on Jio and Airtel’s plans alone. If we include Vodafone-Idea’s plans, this figure could increase further. The last time tariff rates were increased across the industry was in December 2021. At that time, tariffs were increased by 20%.

Experts say, while the burden of inflation will increase on users, the increase in tariffs was necessary for the health of the telecom industry.

Tariff rise reflects on shares, possible positive returns

With the increase in tariffs, the revenue and profit of telecom companies will increase and this will also increase the possibility of better returns on telecom sector shares.

Entry-level 5G plans becoming expensive will increase the ARPU (average revenue per user) of telecom companies by 15 to 17%. ARPU refers to the average revenue per user for the company.

Bharti Airtel has also said that from a financial perspective, a proper business model is necessary, and an ARPU of more than Rs. 300 is essential. With the increase in ARPU, companies’ profits will increase and this will also lead to better returns on telecom sector shares.

Therefore, stock market experts are advising to invest in telecom companies’ shares. Since the announcement of tariff hikes, there has been a rise in the shares of Bharti Airtel and Reliance Industries. Vodafone’s shares have also reached a 52-week high.

Stock market expert Arun Mantri has advised that “shares of Bharti Airtel and Reliance Industries can be purchased. If you already hold these shares, it’s advisable to hold onto them.”

“Instead of buying Vodafone Idea shares, another company to consider is Indus Towers. It is the largest company in the country for mobile tower installations, playing a significant role in the network expansion of telecom companies. You can invest in shares of Bharti Airtel, Reliance Industries, and Indus Towers.”

Therefore, with the increase in tariff plans, the burden of inflation will increase on millions of people. However, there is also an opportunity to earn from the shares of these telecom companies.