Shares of Vodafone Idea rose as investors anticipate industry-wide tariff increases following Bharti Airtel’s decision to withdraw low-priced prepaid packs, potentially boosting revenue and profitability amid a sector turnaround.
Vodafone Idea shares extended their recent rise on Friday as investors bet that Bharti Airtel’s decision to pull back some low-priced prepaid packs could open the door to higher telecom tariffs across the industry. The stock climbed 4.44% to Rs 14.11 on the National Stock Exchange, taking its gain to nearly 11% over three sessions. The broader BSE telecom index also firmed, reflecting renewed optimism around pricing power in the sector.
The latest move by Airtel has focused attention on tariff rationalisation rather than an outright industry-wide price hike. Airtel withdrew four prepaid plans from August 12, including packs priced at Rs 299, Rs 579, Rs 619 and Rs 649. For users of the Rs 299 option, the closest replacement is now the Rs 349 pack, a shift that effectively lifts the headline price by 16%. Analysts say such changes can improve monetisation and average revenue per user, or ARPU, without the need for a formal across-the-board increase.
For Vodafone Idea, any uplift in tariffs could be especially meaningful as the company continues to battle weak profitability and heavy funding needs. Vishnu Kant Upadhyay, AVP, research at Master Capital Services, said a tariff increase would add to ARPU and revenue, although he advised investors to be selective after the stock’s sharp run-up. He pointed to improving subscriber trends and renewed spending on 4G and 5G as additional supports, and said the share could move towards Rs 15 and then Rs 15.50 if momentum holds.
Brokerage views remain mixed but generally constructive. IIFL has suggested Vodafone Idea may either mirror Airtel’s move and lift its own lower-end plans, or keep prices low to win customers switching from a secondary SIM to a primary one. Ambit Institutional Equities is more upbeat, saying the company added 0.3 million subscribers in the June quarter, its first sequential gain since the Vodafone India-Idea Cellular merger, while ARPU excluding machine-to-machine connections rose 2.6% quarter-on-quarter and core telecom revenue increased 1.8%. Ambit has a target price of Rs 18.70 and expects a 15% tariff hike by December 2026, followed by 12% increases every two years.
The rally also comes against a broader backdrop of a fragile but improving turnaround story. Reuters reported that Vodafone Idea narrowed its quarterly loss as ARPU improved and the subscriber base recorded its first net gain since the 2018 merger. The company has said it aims to grow revenue in double digits, triple cash EBITDA and invest Rs 45,000 crore in its network over three years, with chief executive Abhijit Kishore saying promoter backing and lender talks give the group confidence in its financial plan. For investors, the key issue is whether pricing gains, customer stabilisation and network spending can finally translate into lasting recovery.
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