After increasing prepaid tariffs, telecom operators may consider increasing the tariffs for the postpaid segment soon as well. It makes sense for Bharti Airtel and Vodafone Idea to increase tariffs in the postpaid segment as they have a significant presence here. In addition, customer loyalty is high in the postpaid segment and pricing plays a very limited role in the purchasing decision, so the price increase does not lead to churn which is a possibility in the prepaid segment.
Bharti Airtel had increased the rates for the postpaid segment for business users in July and also changed its family plan.
The postpaid market is worth around 22,000 crore in terms of revenue and accounts for 15% of industry revenue and 5% of active subscribers in the industry, according to Jefferies’ estimates. About 50-60% of these subscribers are corporate customers, and 34% of postpaid subscribers are located in the three subways and 36% in the city-centric A circles. Among operators, Vodafone Idea has the highest market share of 43%, followed by Bharti Airtel with 28%.
If we take the case of Bharti, around 50-60% of its postpaid subscribers are corporate customers, so they focus less on pricing and more on a sustained track record of providing service. Moreover, while Bharti has so far maintained a premium in the rates over Jio, even in the prepaid segment, and has handled the churn rate fairly well, it is unlikely that he will be at risk for himself. it increases the rates in the postpaid segment. Postpaid users account for 5% of Bharti’s subscribers and 16% of its mobile revenue in India.
âI think I will be surprised if the postpaid rates are not increased, these rates will increase. Why would they delay it too long? It is not in their best interests to delay it too long. If they delay it any longer, they only hurt themselves, âsaid Sanjay Kapoor, technology, media and telecommunications (TMT) adviser.
Kapoor said he would have expected Vodafone Idea and Bharti Airtel to raise prices for postpaid services alongside prepaid services, as the postpaid base is well strengthened and that is not Reliance Jio’s strength. âIf Airtel increases postpaid prices and Vodafone Idea does too, these customers are not going to migrate to anyone because they are at the top of the market anyway and not as price sensitive as they are used to paying much higher bills. For them paying a higher price for brand preference and for better customer experience, I don’t think that’s a big challenge, âsaid Kapoor, who is also a former CEO of Bharti Airtel.
Analysts believe a postpaid hike can be expected after a few months.
“The increase is inevitable as India is still the lowest tariff country in the world and with the increase in prepaid, postpaid is expected to follow,” Prashant Singhal, leader of emerging market technology, media and entertainment and telecommunications (TMT), EY, mentioned.
Bharti Airtel and Vodafone Idea have both indicated their desire to achieve an Arpu (average achievement per user) of Rs 300 in the near future to remain sustainable in the market. âThe average Arpu in the industry today is around Rs 130. Five years ago, in 2016, it was over Rs 200. So the most important thing is that we have to bring it back first. Arpu at Rs 200 and possibly Rs 300 “, said Ravinder Takkar, CEO and Managing Director of Vodafone Idea, after the announcement of telecommunications reforms.
Currently, Vodafone Idea has the lowest Arpu of Rs 109 among telecom companies, while Bharti Airtel leads with an Arpu of Rs 153. Reliance Jio’s Arpu stands at Rs 143.6.