After hiking post-paid tariffs at the upper end – corporate customers – last week, the country’s second-largest telecom operator, Bharti Airtel on Wednesday raised the bar for its entry-level pre-paid users. The company has scrapped the base level monthly pre-paid plan of Rs 49 and replaced it with a monthly plan of Rs 79 bundled with more data. Simply put, Bharti’s tariff plans now start at Rs 79 a month against the earlier Rs 49.
This is the second time Bharti has raised the base level plan. In December 2019, it had scrapped the Rs 35 entry-level plan to replace it with the Rs 49 plan. Mostly entry-level plans are subscribed by 2G users who are on feature phones. With such hikes, they either leave the network or upgrade to higher level plans, which also include 4G plans. In both cases, the company’s average revenue per user sees a jump.
Last time, when Bharti raised the tariff level from Rs 35 to Rs 49, it lost around 35 million users but saw improvement in its Arpu. Its current Arpu at Rs 145 is the best in the industry. Bharti has around 55 million users in the Rs 49 plan.
Since Reliance Jio, whose pre-paid tariffs are on an average 15-20% lower than Bharti’s, is not raising tariffs across the board, Bharti has taken bold as well as cautious steps in rejigging its tariffs to improve its realisations as well as Arpu. For instance, by raising the tariffs in the post-paid segment for corporate users, it has protected the downside since there’s very low churn in this segment. Similarly, by raising only the entry-level plan in the pre-paid segment while leaving the mid-level plan untouched, it has ensured that the bulk of its users – pre-paid users comprise 95% of its total user base – do not look for other options.
In the entry-level, subscribers do not have much of an option to downtrade. For instance, Reliance Jio has Rs 69 and Rs 39 monthly pre-paid plans, but their validity is 14 days against Bharti’s 28 days for the Rs 79 plan.
In the low-priced pre-paid packs, Vodafone Idea has the highest number of options available. The company currently offers six pre-paid validity packs under Rs 100 – Rs 39, Rs 49, Rs 59, Rs 65, Rs 79 and Rs 95. However, the company is also expected to raise tariffs.
The Bharti management has consistently said that it needs to raise the Arpu levels in the range of Rs 200-300 a month.