Airtel Reliance Jio tariff hike

Will Centre Intervene in Airtel, Reliance Jio Tariff Hike? ‘Not Critical’

The government and telecom regulator will not intervene in the recent tariff hikes by Airtel and Reliance Jio, officials told the Economic Times. Despite the price increases, tariffs in India remain among the cheapest globally, and authorities are focusing on improving service quality.

Key Insights:

No Intervention Planned: Government and telecom authorities see no need for intervention as the telecom sector remains competitive.
Historical Context: The tariff hike follows a three-year period without increases.
Service Quality Focus: Authorities emphasize the need for telecom companies to enhance service quality despite price hikes.

Market Reaction:

This week, India’s three private telecom companies raised mobile tariffs by 11-25%. Analysts predict this will slightly increase telecom spending for urban households from 2.7% to 2.8% of household expenditures in fiscal 2025. For rural households, the expenditure is expected to rise from 4.5% to 4.7%.

Expert Opinions:

Government Perspective: “There is enough competition in the telecom sector, and the situation does not warrant intervention,” an official told ET. “Consumers may feel some impact from the price rise, but the hike follows three years of stable pricing.”
Telecom Regulatory Authority of India (TRAI): A senior official stated, “There is a policy of forbearance in telecom tariffs, and telcos are free to set their prices. However, they must provide high-quality service to consumers.”

Market Analysis:

Axis Capital noted, “The 13% average tariff increase is moderate and unlikely to significantly impact household expenditure. Even with Jio’s higher tariffs and 5G monetization, the increases are expected to be well absorbed by consumers.”

Conclusion:

The decision not to intervene in the tariff hikes by Airtel and Reliance Jio indicates confidence in the competitive nature of the telecom sector. As India continues to offer some of the lowest tariffs globally, the focus remains on enhancing service quality to meet consumer expectations. Despite the modest price increases, the overall impact on household expenditures is expected to be minimal, suggesting a balanced approach to telecom pricing and service improvements.