Bharti Airtel's New Postpaid Plans Can Help Boost ARPU
Bharti Airtel Ltd. indirectly increased the pricing of its postpaid plans even as stiff competition prevents India’s telecom operators from tariff hikes.
The operator discontinued its Rs 749 family postpaid plan for new customers, according to its statement. The only available option in the category is the Rs 999 plan, increasing the price by 33%.
The company also increased the price of an add-on connection by 20% from Rs 249 to Rs 299.
The revised plans come with additional data. For Rs 999, a user gets 210 GB data compared with 150 GB in the discontinued plan. The add-on plan will offer 30 GB instead of 10 GB previously.
Bulk of the user base comprises prepaid plans for operators. But high-cost postpaid connections contribute a chunk of the revenue. And increased pricing will aid Bharti Airtel’s average revenue per user. According to a UBS report, Bharti Airtel has 1.67 crore postpaid subscribers as of March.
Bharti Airtel’s postpaid retail plans now cost Rs 399 to Rs 1,599, while corporate plans start from Rs 299 and go till Rs 1,599.
The company discontinued the Rs 199 and Rs 249 corporate plans, and the and entry-level plan now costs Rs 299, indicating a 50% jump in prices. Under the Rs 399 plan, the data limit is enhanced to 60 GB a month from 50 GB earlier.
"All eligible Airtel corporate customers will be migrated to the new plans, as applicable, from their subsequent billing cycles", Bharti Airtel said in a press statement.
The corporate plans offer unlimited calls and business tools like Airtel Call Manager.
The Rs 399 plan gives access to Wynk Music App, Airtel Xstream App Premium, and Shaw Academy for a year.
The Rs 499 and Rs 1,599 plans offer Amazon Prime, and Disney+ Hotstar VIP subscription for a year, VIP service, Airtel Secure, Wynk Music App Premium, Airtel Xstream App Premium, and Shaw Academy.
The Rs 399 and Rs 499 postpaid retail plans remain unchanged and offer 40 GB and 75 GB data, respectively. After the discontinuation of Rs 749 plan, Rs 999 plan becomes the entry-level family plan. However, three SIM cards will be provided compared with four earlier.
The Rs 1,599 plan continues to provide two connections with unlimited data up to 500 GB, post that the speed will reduce to 128 kbps.
The retail plans provide access to unlimited calls.
Plans from Rs 499 onwards offer Amazon Prime and Disney+ Hotstar VIP subscriptions for a year, VIP Service, Airtel Secure, Wynk Music App Premium, Airtel Xstream App Premium, and Shaw Academy.
Lack of tariff hike is prolonging the recovery of the telecom sector. “There has been a steady improvement in ARPU because of the earlier tariff hikes and up-gradation of subscribers from 2G to 4G,” ICRA Ltd. said in a note. “Tariff hikes would be critical for the fundamental improvement of the health of the sector.”
Vodafone India had increased its postpaid tariff for two of its high-end plans by Rs 50 each last year. Its family packs worth Rs 598 and Rs 749 now cost Rs 649 and Rs 799, respectively.
Share Price Reaction
Shares of Bharti Airtel rose as much as 2.55% to Rs 560.65 apiece before paring gains. This comes on the back of a 4% rally on Thursday. The stock has gained 8% so far in 2021 compared with the 13% rise in the benchmark Nifty 50 index.
Of the 33 analysts tracking Bharti Airtel's shares, 31 have "buy" rating, while the remaining two recommend "hold", according to Bloomberg data. The consensus 12-month price target implies an upside of 29% from current market price.