Jio’s tariff hikes raise concerns about market share wars, demand elasticity

Some of the excitement about the tariff hikes announced by telcos this week is wearing off. After Reliance Jio Infocomm Ltd announced its new tariffs, shares of Vodafone Idea Ltd and Bharti Airtel Ltd have given up more than two-thirds of their gains for the week. Jio’s revised tariffs are at a meaningful discount to those announced by Vodafone Idea and Bharti Airtel. Earlier in the week, Vodafone Idea and Bharti Airtel’s combined market capitalization surged by ₹12,300 crore after they raised tariffs by up to 50%. After Jio’s tariff hikes, the gains for the week have fallen to around ₹3,800 crore.

Jio’s unlimited plans in the one-month category are priced about 16-20% lower than its rivals, and about 7-14% lower in the three-month category. This means the company’s fast pace of market share gains can be expected to continue. “Jio has priced its base plan 20% cheaper than the comparable plans of both the companies.