Bharti Airtel, Vodafone Idea likely to hike postpaid rates

“The increase is unavoidable because India remains the world’s lowest tariff country, and with the prepaid increase, postpaid is likely to follow suit,” said Prashant Singhal, EY’s emerging markets technology, media & entertainment, and telecommunications (TMT) leader.

Following the hike in prepaid rates, telecom companies may consider raising postpaid rates as well. Because they have a significant presence in the postpaid segment, it makes sense for Bharti Airtel and Vodafone Idea to raise their tariffs. Furthermore, because customer loyalty is high in the postpaid segment and pricing plays a minor role in purchasing decisions, increasing tariffs does not result in churn, as it does in the prepaid segment.

In July, Bharti Airtel increased postpaid tariffs for corporate customers and tweaked its family plan.

According to Jefferies estimates, the postpaid market is worth around ‘22,000 crore in revenue and accounts for 15% of the sector’s revenues and 5% of active subscribers. Around 50-60% of these subscribers are business customers, and 34% of postpaid subscribers live in the three metros, with another 36% living in urban centric A-circles. Vodafone Idea has the highest market share of 43 percent, followed by Bharti Airtel with 28 percent.

For example, around 50-60% of Bharti’s postpaid subscribers are business customers, so the company’s focus is less on pricing and more on a long-term track record of service delivery. Furthermore, if Bharti has so far maintained a tariff premium over Jio’s in the prepaid segment while also managing churn well, it is unlikely that it will face risk if it raises tariffs in the postpaid segment. Postpaid subscribers account for 5% of Bharti’s subscribers and 16% of the company’s India mobile revenue.

“I think I’ll be surprised if postpaid rates don’t go up; such tariffs will go up.” Why would they take such a long time to do it? Delaying it for an extended period of time is not in their best interests. Sanjay Kapoor, a technology, media, and telecom (TMT) adviser, said that if they wait any longer, they will only harm themselves.

According to Kapoor, he would have expected Vodafone Idea and Bharti Airtel to raise postpaid prices alongside prepaid because the postpaid base is well-fortified and not Reliance Jio’s strong suit. “If Airtel and Vodafone Idea raise postpaid prices, those customers will not migrate to anyone else because they are already at the premium end of the market and are not as price sensitive because they are accustomed to paying much higher bills.” “I don’t think it’s a big challenge for them to pay a higher price for brand preference and better customer experience,” said Kapoor, who is also the former CEO of Bharti Airtel.

Analysts believe that after a few months, a postpaid increase is likely.

“The increase is unavoidable because India remains the world’s lowest tariff country, and with the prepaid increase, postpaid is likely to follow suit,” said Prashant Singhal, EY’s emerging markets technology, media & entertainment, and telecommunications (TMT) leader.

Both Bharti Airtel and Vodafone Idea have stated their desire to achieve an Arpu (average revenue per user) of Rs 300 in the near future in order to remain competitive. “Today, the industry’s average Arpu is around Rs 130.” It was over Rs 200 five years ago, in 2016. So, the most important thing is that we get the Arpu back to Rs 200, and then to Rs 300,” Vodafone Idea CEO and managing director Ravinder Takkar said after the telecom reforms were announced.

Vodafone Idea currently has the lowest Arpu of Rs 109 among telecom companies, while Bharti Airtel has the highest Arpu of Rs 153. The Arpu of Reliance Jio is Rs 143.6. India07