During Bharti Airtel’s first quarter ended June 30, 2023, earnings webinar, Gopal Vittal, Managing Director, and Chief Executive Officer, shared insights into the postpaid segment and how the company is leveraging different levers to improve its key metrics such as ARPU and others.
With 833,000 net adds, the Average Revenue Per User (ARPU) saw a jump from Rs 193 to Rs 200, making it the highest ARPU in the Indian telecom market currently. With this achievement, Airtel has reached its first short-term goal that the company set for itself a few years ago. The CEO stated that the company is now aiming for the next goalpost, a long-term target of Rs 300 ARPU.
According to TelecomTalk’s perspective, for a company to expect users to opt for its postpaid services, it requires customers to place their emphasis on service quality and brand, playing a crucial role in postpaid uptake. Customers have their reasons for choosing postpaid, depending on different scenarios. However, without resorting to cheap offerings or compromising service value, Airtel managed to attract a significant number of postpaid users, demonstrating significant brand value and customer trust.
Also Read: Airtel Postpaid Plan at Prepaid Pricing for Two Users Explained
If you are a regular TelecomTalk reader, you must already be aware of Airtel’s Postpaid Offerings. Airtel offers postpaid services through Standalone Postpaid – Infinity Plans and through Airtel Black offerings, which bundle DTH, Broadband, and Mobile Connection Services.
Premiumization Approach
So, what is driving the ARPU? Gopal Vittal, in his earnings call, highlighted that Prepaid to Postpaid is one area where the ARPU doubles for Airtel.
“Prepaid to postpaid is one area where the ARPU pretty much doubles. The third area is data monetization. This is driven through a strong mix of contextual targeting, sophisticated data science, and simple digital journeys. Data consumption by itself gives us a significant upside,” he added.
Also Read: Airtel 599 Postpaid Family Plan Sees Traction: Check What It Offers
Gopal shared that the company doubles ARPU every time a customer moves from prepaid to postpaid. Airtel’s Infinity Family postpaid plan is very well-loved by users, with almost 65 percent to 70 percent of users now on family plans.
He also highlighted that the shift the company made from the entry-level Rs 99 to Rs 155 price point has also contributed to a slight increase in the ARPU. TelecomTalk has already covered this aspect in our earlier stories, which can be accessed through the following link.
Also Read: Bharti Airtel Shows Positive Net Subscriber Growth Amid Tariff Hikes
Postpaid is an Opportunity
Regarding the opportunity and user addition in the postpaid segment, Gopal shared, “I think Postpaid, we believe, is a big opportunity. Today, about 6 percent of our users are on Postpaid. If I look at markets like Thailand, that number is well past the teens. If I look at markets like Brazil, it’s almost 40 percent to 50 percent. So the upside opportunity in Postpaid is clearly high. And I think India, over a period of time, will start moving more and more towards postpaid. That has to happen. The levers of growth for us are number one, of course, prepaid to postpaid, that’s one lever of growth where we see an increase in ARPU. The second lever of growth is switching a user from competition to us.”
Also Read: Here’s Why Airtel 999 Postpaid Plan Is Best for a Small Family
5G Advantage
Regarding how 5G is helping Airtel grow the postpaid user base, Gopal said, “And I think 5G tends to play a role where the early adopters of smartphones who are looking for a 5G network prefer us. So I think there’s an opportunity here because one of the players has not launched 5G. That’s clearly an opportunity.”
“5G is a very strong pivot to actually entice the customer and make them come onto our network,” he said.
Data Monetization
Gopal highlighted another reason for the uptake in ARPU: data monetization. When the data allowance runs out on an impulse basis, customers are opting for data packs Airtel offers. TelecomTalk has already extensively covered the Data Packs that Airtel offers in previous stories.
Feature Phone to Smartphone Migration
TelecomTalk already presented a detailed analysis of Airtel’s Affordable 4G Smartphone Use case, and Gopal’s comments on ARPU increase appeared to be on similar lines.
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Regarding Smartphone Migration, Gopal stated, “Like I mentioned, I think prepaid feature phone to smartphone, you get an ARPU upside. The entry-level feature phone price plan is at 155. The entry-level smartphone pricing, where you offer meaningful amounts of data, is 239. So you do see almost a 50 percent jump as people move from a feature phone to a smartphone. And that is a function of how many users moved in a certain quarter.”
Also Read: Airtel Infinity Family 1499 Plan Detailed: A Premium Postpaid Experience
Airtel’s postpaid offerings start from an entry-level plan of Rs 399 and extend to the most premium plan of Rs 1,499, the benefits of which have been discussed by TelecomTalk previously. In total, in the Regular Postpaid offerings, Airtel offers around 6 different plans to cater to a range of audiences and use cases. However, Airtel emphasizes Family Plans catering to 2 or 4 members, offered within the Airtel Infinity Postpaid category.
Also Read: Bharti Airtel Creates Airtel 5G Plus Experience Zones at Stores
Gopal also highlighted Airtel’s quiet rollout of more stores, which are the company’s own stores in neighbourhood catchments, where the opportunity lies. All the above opportunities, digital experiences which Airtel calls levers, are helping drive ARPU to higher levels.
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