Airtel CEO Says ARPU Drivers Remain Intact Post Tariff Revision

Airtel CEO Says ARPU Drivers Remain Intact Post Tariff Revision
Indian telecommunications service provider Bharti Airtel has reported the highest industry ARPU (Average Revenue Per User) of Rs 233 in Q2FY25, compared to Rs 211 in Q1, maintaining its industry-leading growth. With the industry-wide tariff revision by private operators effective July 2024, Airtel says it is on track to achieve its immediate ARPU target of Rs 300. However, in the mobile segment, “the full benefit of tariff repair will be reflected in the coming quarter,” said Gopal Vittal, Managing Director and Chief Executive Officer of Bharti Airtel Limited, during the company’s earnings call for Q2FY25.

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“At the same time, the ROCE (Return on Capital Employed) of the India business is still very low at 11.2 percent. The only way to improve this is further tariff repair,” Vittal added.

Airtel ARPU Drivers Remain Intact

Despite the tariff revision, Airtel’s CEO emphasised that the underlying ARPU drivers, which include feature phone to smartphone upgrades, prepaid to postpaid upgrades, data monetisation, and international roaming, remain intact.

1. Prepaid to Postpaid Migration

For Airtel, the primary driver of ARPU growth is the migration from prepaid to postpaid, which the company reports has resulted in consistent net additions over several quarters. Airtel has strengthened its position in the postpaid segment by adding 0.8 million customers in Q2 FY25, bringing its total customer base to 24.7 million. In the postpaid segment, Airtel said its focus is on 80 million potential customers whom the company believes could upgrade to postpaid.

2. Data Monetisation

The second driver is data monetisation. Vittal explained that when customers exhaust their data allowance, Airtel encourages them to either purchase data packs impulsively or upgrade to the next available plan, such as the 2GB plan. “That has been a very big driver of our ARPU growth outside of tariff repairs,” he said noting that “keeping tariff repair aside that has been a big driver of our ARPU growth.”