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

Mumbai: Some of the excitement about tariff hikes announced by telecom companies this week is wearing off. Vodafone Idea Ltd and Bharti Airtel Ltd’s shares have given up more than half their gains for the week, after Reliance Jio Infocomm Ltd announced its new tariffs. Jio’s revised tariffs remain at a meaningful discount to the tariffs announced by Vodafone Idea and Bharti Airtel Ltd. Earlier in the week, Vodafone Idea and Bharti Airtel’s market capitalization had risen 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 ₹5,600 crore.

Jio’s unlimited plans in the one-month category are priced about 16-20% lower, 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.