Bharti Airtel, the country’s second largest telecom operator, announced a pricing hike for its postpaid users on Thursday, marking the first step in boosting prices. The increase is significant — 50% — in the enterprise market, which accounts for roughly 60% of the company’s postpaid consumers. Although postpaid subscribers make up only 5% of the company’s entire subscriber base, they account for roughly 20% of revenues and are heavy Arpu users. As a result of this decision, the company’s average revenue per user (Arpu) will increase. Bharti’s Arpu was Rs 145 at the end of the March quarter, the highest in the industry.
In a situation where other operators are constrained since their pricing are already at a premium to Jio’s, the move is seen as both clever and cautious in terms of rising tariffs. Because postpaid has low customer attrition, especially in the enterprise segment, boosting tariffs is a safe bet while improvising. According to industry estimates, the whole postpaid market is valued roughly Rs 22,000 crore in sales and accounts for 15% of the sector’s revenues and 5% of active customers.
Around 50-60% of these subscribers are business consumers, and 34% of postpaid subscribers live in the three metro areas, with another 36% in urban focused A-circles. In December 2019, Bharti Airtel, along with other telecom companies such as Reliance Jio and Vodafone Idea, increased their pricing. Prepaid users’ tariffs were raised at that time. Bharti has eliminated the entry-level Rs 199 monthly plan as well as the Rs 249 plan for enterprise users who are bulk connections acquired by corporations, and such plans will now begin at Rs 299.
The starting plan for retail consumers, who make up about 40% of Bharti’s postpaid user base, remains at Rs 399 per month, but the Rs 749 family plan, which included two SIM connections, has been eliminated. As a result, the alternative family plan — Rs 999 per month – becomes the default option. Previously, four SIM connections were available, however that number has since been lowered to three. Subscribers who used the Rs 749 family plan with two SIM connections can still switch to the Rs 399 plan and acquire an add-on connection for Rs 299, according to the business. On all other plans, a similar combination is conceivable. For example, for a family of four, an additional SIM connection can be purchased for Rs 299 for the Rs 999 family plan.
In the same way, Vodafone Idea’s overall customer base has decreased by roughly 34% in the last two years, although its postpaid customer base has only decreased by 10%. In reality, Vodafone has a greater market share in the postpaid segment than Bharti.