Vodafone Idea and Bharti Airtel might soon hike the prices in the prepaid smartphone users segments to elevate the resources and increase the cash generation to cater to the upcoming AGR dues burden and other payment defaults. As reported by ET Telecom, a price hike in the prepaid smartphone user segment will be beneficial for the telcos as it generates the bulk of telco revenues. The renowned entity Goldman Sachs has predicted that Bharti Airtel could be the first telecom operator to increase price in the prepaid smartphone segment, which will be followed by Vodafone Idea.
Airtel Discontinued the Rs 49 Prepaid Plan
Airtel has hinted towards the price hike and discontinued the Rs 49 entry-level prepaid plan for prepaid users. Now the entry-level prepaid plan of Airtel starts from Rs 79, which is 60% costlier. It is also expected that Vodafone Idea will walk on the same road and discontinue the Rs 49 prepaid plan at a pan-India level in the upcoming days. The brokerage firm expects that a price hike might happen before the end of 2021 as prepaid smartphone users create nearly 50% to 80% of telcos FY21 revenues.
Airtel and Vodafone Idea has to Clear First AGR Dues Instalment By March 2022
IIFL securities marked that Vodafone Idea has already matched Airtel on post-paid plans. Now both telcos are aggressively eyeing the opportunity to reap monetary benefits from the prepaid segment. Apart from quarterly and debt payments, Bharti Airtel and Vodafone Idea has to pay Rs 4,100 crore and Rs 9,000 crore, respectively, towards the first instalment of AGR dues by March 2022.
Goldman Sachs also revealed that Bharti Airtel’s balance sheet is more comfortable than Vodafone Idea. It is expected that the telco will face an annual cash shortfall of nearly Rs 2,000 crore if the tariff is not hiked. The telecom regulator revealed that Bharti Airtel had 348.29 million users at May-end while Vodafone Idea had 277.72 million users. Nearly 90% of the user base of the telcos use prepaid services. On the other side, Reliance Jio revealed its June quarter results and stated that it has nearly 441 million subscribers. Airtel and Vodafone Idea are yet to reveal their June quarter earnings numbers.