Jio New Plans Could Be 20 Percent Cheaper Than Airtel, Vodafone Idea: Report

Jio will introduce new plan prices on December 6, whereas Airtel and Vodafone Idea have already announced new plans.

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Jio New Plans Could Be 20 Percent Cheaper Than Airtel, Vodafone Idea: Report

Jio said it will be introducing an "all in one" plan from December 6 across multiple price points

Highlights
  • Jio has said it will raise rates by 40 percent
  • Only select Jio packs will have 40 percent increase: analyst
  • According to the analyst, popular ones could see 25-30 percent hike

Even with an announced tariff hike of 40 percent, Reliance Jio would be cheaper by 15-20 percent than other incumbents, analyst firms said on Monday while still awaiting details of the company's new plans. Along with other telecom companies, even Jio has said it will raise rates by 40 percent but has not formalised the changes. Jio said that it will be introducing an "all in one" plan from December 6 across multiple price points with unlimited voice and data, which will have 300 percent more benefits than earlier.

"Similar to incumbents, we think only select packs (of Jio) will have 40 percent increase but popular ones could have 25-30 percent. We think the incremental 300 percent benefit which Jio is talking about is by offering more data allowances. In our view that incrementally doesn't entice users much beyond 1.5 GB," Bank of America Merril Lynch said in a note.

"Even after these hikes, we believe Jio will continue to be 15-20 percent cheaper than the incumbent operators. If Jio data allowances are not within "fair usage policy" control, then we see upside risks to our capex investments", it said.

The report also said the tariff hikes announced by Vodafone Idea (VIL) and Bharti Airtel were better than expected, which will be effective from Tuesday. While very low and very high denomination tariffs were hiked by up to 41 percent, the popular plans saw lesser tariff hikes of 25-30 percent.

For VIL, the popular 1.5 GB/day, 84 day pack will cost 31 percent more at Rs. 599 versus Rs. 458 (33 percent hike for Bharti) and 25 percent hike for Rs. 199 (will be now Rs. 249), 1.5 GB/day pack. A 41 percent increase comes on the annual plan of Rs. 1,699 which will now cost now Rs. 2,399.

On an average, the tariff hikes by Bharti and VIL are of similar magnitude.

Credit Suisse said after that Jio details its tariff, the premium of the Airtel and Vodafone hikes are likely to decline to 10-20 percent for the more popular tariff plans.

" Jio has also announced its intention to participate in market repair. In addition to tariff hikes by Bharti Airtel and Vodafone Idea, Jio has also announced its intention to increase tariffs effective December 6. While the details of its new plans are awaited, the company quantified the hike to be up to 40 percent for its 'All in one plans'", Credit Suisse said.

"We note that post the announced tariff hikes, Bharti Airtel and Vodafone Idea's plans are at a 20-60 percent premium over Jio's October 2019 'All-in-plans'. We think after Jio's announced tariff hikes, the premium is likely to decline to 10-20 percent for the more popular tariff plans", it added.

Vodafone Idea and Bharti Airtel have raised tariffs of their popular bundled prepaid plans by 25-41 percent as well as the low-end plans by around 40 percent.

"Jio has indicated hikes of a similar magnitude albeit with higher benefits; details awaited. We like the way the new pricing construct is designed - it encourages up-trading and discourages down-trading; this should help recreate parity in the industry. We await details from Jio to revise our models," Kotak said.

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