New Delhi: Telecom major Bharti Airtel has discontinued several of its lower-priced prepaid plans, a move that could help the company improve its average revenue per user (ARPU) while also creating a potential opportunity for rival Vodafone Idea (Vi) to attract price-sensitive customers.
Airtel has removed its ₹299, ₹319, ₹579 and ₹619 prepaid plans offering 1.5GB of daily data, along with the ₹649 plan offering 2GB of daily data. The discontinued plans had validity periods of around 56 or 60 days.
Analysts believe the move could encourage some Airtel customers to migrate to higher-priced plans. At the same time, Vodafone Idea could benefit if customers looking for cheaper alternatives decide to switch.
How Much Could Airtel’s ARPU Increase?
According to JM Financial, if around 10% of Airtel’s customers shift to newer and more expensive plans, the company’s ARPU could increase by approximately ₹5–₹6.
That would represent an increase of roughly 2% from Airtel’s Q1 FY27 ARPU of ₹264.
The brokerage estimates that approximately 128 million Airtel customers currently use plans offering 1GB or 1.5GB of daily data. This represents around 35% of the company’s total subscriber base.
JM Financial estimates that every ₹5 increase in ARPU could potentially add around ₹1,200 crore to Airtel’s FY27 EBITDA.
Morgan Stanley Sees Higher ARPU Potential
Morgan Stanley has presented a somewhat more optimistic scenario.
According to its assessment, if around 20%–30% of Airtel’s mobile customers upgrade to the ₹349 plan, Airtel’s ARPU could increase by approximately ₹8–₹12.
This highlights why telecom operators are increasingly focusing on customer upgrades and plan rationalisation rather than relying only on across-the-board tariff hikes.
Why Could Vodafone Idea Benefit More?
The Airtel move could provide an opportunity for financially weaker rival Vodafone Idea.
Analysts believe that if Vodafone Idea also encourages customers to move from lower-priced plans to more expensive options, the potential impact on its ARPU could be significant.
According to JM Financial, if around 15% of Vodafone Idea’s customers migrate to higher-priced plans, the company’s ARPU could increase by approximately ₹7–₹8.
Vodafone Idea’s Q1 FY27 ARPU was ₹177, substantially below Airtel’s ₹264.
Therefore, even a modest improvement in Vodafone Idea’s ARPU could have a meaningful impact on its financial performance.
JM Financial estimates that such an improvement could potentially increase Vodafone Idea’s FY27 EBITDA by around 2% and its valuation by approximately 3%.
Vodafone Idea Has Several Strategic Options
According to analysts at IIFL Capital, Vodafone Idea currently has multiple options.
The company could follow Airtel and rationalise its lower-priced plans, encouraging subscribers to migrate to higher-value plans.
Alternatively, Vi could maintain its existing pricing for some time and use its relatively lower tariffs as a customer acquisition strategy.
This could be particularly relevant for users who currently keep a Vodafone Idea SIM as a secondary connection.
If Airtel’s lower-priced options become less attractive, some of these users could potentially make their Vi connection their primary SIM.
Jio Has Not Announced a Similar Change
While Airtel has discontinued the selected plans, Vodafone Idea and Reliance Jio have not announced similar changes to their tariff structures as of the information cited in the report.
This gives both competitors an opportunity to assess customer behaviour before making their own decisions.
If Vi chooses to maintain lower-priced offerings while Airtel reduces its entry-level options, the company could potentially position itself as a more affordable alternative.
Airtel Had Previously Removed the ₹249 Plan
This is not the first time Airtel has reduced the availability of lower-priced plans.
In August last year, the company removed its ₹249 plan, which offered 1GB of daily data with 28 days of validity, from its online platforms.
Following that move, the ₹299 plan became Airtel’s entry-level offering.
The latest removal of the ₹299 and other lower-priced plans therefore represents another step in the company’s broader strategy of moving customers towards higher-value plans.
Why Is Airtel Changing Its Prepaid Plans?
Airtel has argued that customers who consume more data should be willing to pay more for that usage.
The company believes that offering large amounts of data, including unlimited data, at very low prices limits the revenue potential of telecom operators.
Gopal Vittal, Airtel’s Executive Vice Chairman, has also highlighted the need for changes in the telecom industry’s existing pricing structure during recent earnings discussions.
According to the management’s view, the sector needs a meaningful change in its pricing model over the coming years to support stronger industry economics.
Is This the Beginning of a Tariff Hike?
Analysts generally do not consider the latest move a direct tariff hike.
Instead, it is being viewed as a plan rationalisation strategy designed to move customers towards higher-priced offerings.
However, the move could potentially be an indication of a broader shift towards higher telecom tariffs in the future.
According to Citi Research, telecom operators regularly rationalise their plans by changing their number, structure and pricing. Such changes can have a positive impact on ARPU without immediately raising the headline tariff across all plans.
When Could the Next Major Tariff Hike Come?
IIFL Capital expects the next major telecom tariff increase to potentially take place towards the end of 2026.
The brokerage had previously expected a tariff hike during the July–September quarter, but its current assessment points towards a later increase.
If tariff hikes eventually materialise, the impact could be significant for the industry’s ARPU, EBITDA and valuations.
Airtel vs Vodafone Idea: Potential Impact
| Factor | Airtel | Vodafone Idea |
|---|---|---|
| Q1 FY27 ARPU | ₹264 | ₹177 |
| Estimated ARPU increase | ₹5–₹12 depending on upgrade scenario | ₹7–₹8 under JM Financial’s scenario |
| Potential benefit | Higher ARPU and EBITDA | Potentially stronger ARPU improvement and customer acquisition |
| Strategy | Push customers towards higher-value plans | Could retain lower prices or follow Airtel |
| Key opportunity | Monetise existing customers | Attract price-sensitive and secondary-SIM users |
What Should Investors Watch?
The key factor to watch will be customer behaviour following Airtel’s plan changes.
Investors should monitor:
- Airtel’s ARPU growth
- Customer upgrades to higher-priced plans
- Vodafone Idea’s subscriber additions or losses
- Vi’s ARPU improvement
- Jio’s response to Airtel’s move
- Future telecom tariff hikes
- Impact on EBITDA and cash flows
If Airtel successfully moves customers towards higher-value plans without significant subscriber losses, the strategy could strengthen its financial performance.
For Vodafone Idea, the situation could be a double opportunity: it could either attract customers looking for cheaper plans or improve its own ARPU through selective plan rationalisation.
Bottom Line
Airtel’s decision to discontinue several ₹299–₹649 prepaid plans is more than a simple product change. It reflects the industry’s broader effort to increase monetisation and improve ARPU.
For Airtel, the move could generate higher revenue per customer if users migrate to more expensive plans. For Vodafone Idea, however, it could create an opportunity to attract price-sensitive subscribers while also potentially improving its own ARPU.
Meanwhile, Reliance Jio’s response will be closely watched.
The latest move may not technically qualify as a broad-based tariff hike, but analysts believe it could be a step towards higher telecom pricing, with a larger industry-wide tariff increase potentially coming later in 2026.
Disclaimer: This article is for informational and educational purposes only and should not be considered investment advice. Investors should conduct their own research or consult a qualified financial adviser before making investment decisions.
