Bharti Airtel, the country’s second largest telecom operator, on Thursday made the first move in raising tariffs by announcing a price hike for its postpaid subscribers. The hike is substantial — at 50% — in the enterprise segment, which accounts for around 60% of the company’s postpaid users.
Though postpaid users comprise only 5% of the total subscriber base of the company, in terms of revenues they contribute around 20% and are high Arpu users. The average revenue per user (Arpu) of the company, therefore, will rise as a result of this move. At the end of the March quarter, Bharti’s Arpu was Rs 145, the highest in the industry.
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The move is seen as smart as well as cautious as far as raising tariffs is concerned in an environment where with Jio not taking an initiative in raising prepaid tariffs, other operators are constrained as their tariffs are already at a premium to Jio’s. Postpaid is a segment with hardly any customer churn, especially in the enterprise segment, and so raising tariffs is a safe option while improving realisation.
The overall postpaid market is worth around Rs 22,000 crore in revenue terms and forms 15% of the sector’s revenues and 5% of sector’s active subscribers, according to industry estimates.
Around 50-60% of these subscribers are enterprise customers, and 34% of postpaid subscribers are situated in the three metro and another 36% in urban centric A-circles.
Bharti Airtel as well as other telecom operators like Reliance Jio and Vodafone Idea had last hiked tariffs in December 2019. That time the tariffs were raised for the prepaid users.
For enterprise customers which are bulk connections taken by corporates, Bharti has discontinued the entry-level Rs 199 monthly plan as well as the Rs 249 plan and now onwards such plans will begin from Rs 299.
For retail customers – who form around 40% of Bharti’s postpaid user base — the starting plan continues to remain at Rs 399 a month, but the Rs 749 family plan which provided two SIM connections has been dropped. This automatically makes the other family plan – Rs 999 per month – the starting plan. Here, earlier four SIM connections were provided which has now been reduced to three. However, data has been increased from 180 GB a month to 210 GB a month. The add-on SIM rate has also been hiked from Rs 249 to Rs 299 but monthly data has been increased from 10 GB to 30 GB.
The company said subscribers who used the Rs 749 family plan providing two SIM connections can still opt for the Rs 399 plan and get an add-on connection for Rs 299. A similar combination is possible on all other plans. For instance, for the Rs 999 family plan, an additional SIM connection can be taken for Rs 299 for a family of four.
The stickiness and absence of churn in the postpaid segment can be gauged from the fact that in the past Jio has had a Rs 199 postpaid plan at a 60% discount to Bharti’s entry-level postpaid plan for more than two years, but Bharti’s postpaid customer data did not see a fall. Instead, its postpaid customer base went up marginally during the last two years.
Similarly, Vodafone Idea has seen around 34% fall in its overall customer base in the last two years, but its postpaid customer base went down by just 10% during this period. In fact, in the postpaid segment Vodafone has a larger market share than Bharti’s.