Why is the Removal of Cheaper Postpaid Plans a Good Move for Both Telcos and the Industry?

Bharti Airtel and Vodafone Idea started focussing on improving their ARPU and also made it clear that they just want the customers who pay to use services

  • Bharti Airtel's postpaid plans now start at Rs 499 and goes up to Rs 1,599
  • Vodafone Idea is still providing the base Rs 399 postpaid plan to the subscribers

Incumbent telcos like Bharti Airtel and Vodafone Idea phased out the entry-level or cheaper postpaid plans priced at Rs 199, Rs 299, Rs 349 and so on earlier this year. And it’s a good move from them as the industry has been reeling ever since the entry of Reliance Jio back in 2016. While Reliance Jio is not focusing much on the postpaid segment, it’s Bharti Airtel and Vodafone Idea battling for the top spot with the former leading the pack. Airtel is now offering just four postpaid plans to the customers priced between Rs 499 and Rs 1,599, while Vodafone Idea’s postpaid plans still at Rs 399 and goes all the way up to Rs 1,999. Why is the removal of entry-level postpaid plans a good move for the telcos and the industry alike?

Bharti Airtel’s Attempts at Increased ARPU

One of the recent moves that Bharti Airtel has adopted to bring a positive change in its ARPU is through the removal of low paying postpaid plans like Rs 399. Now the Airtel postpaid subscribers have limited choices starting from Rs 499, thus leading to a better ARPU for the company. The introduction of minimum recharge plans is also a move on similar lines, as it requires the customer to pay the company repetitively on regular intervals.

Vodafone Idea Also Aims Increased ARPU

Another telecom operator, Vodafone Idea, have also made similar moves in the market and have been eyeing improved ARPU since quite some time now. Vodafone Idea has also introduced minimum recharge plans for its subscribers, meaning that now customers will have to recharge their accounts once in a month to keep their services running. Vodafone has also made some changes to its postpaid plans, thus signalling a path towards increased ARPU. Furthermore, the company is providing the Rs 299 postpaid plan in just a few circles at the moment.

Better ARPU Also Crucial for Reliance Jio

It is also worth noting that with each passing quarter, Reliance Jio which currently is the biggest rival to Bharti Airtel, has been witnessing falling ARPU for five consecutive quarters whereas Airtel has been seeing an appreciating ARPU which is about to match Reliance Jio’s in the coming months. Analysts believe that if Reliance Jio wants to maintain the path of growth, then it will depend on an increased ARPU and massive subscriber addition.

Currently, ‘Airtel’s ARPU rests at Rs 125, which is extremely close to Reliance ‘Jio’s figure of Rs 126.6. While the telcos’ attempt at increasing ARPU have largely come off in the form of postpaid portfolio revamp and introduction of minimum recharge plans, these ‘aren’t the only options. The telcos now want the subscribers to spend more and more each month so that the financial situation of the industry players can be restored.

After the stabilisation of tariff prices, and industry players, a direction of better financial health seems to the appropriate pathway for telcos. As such, the companies are bound to chase an increased ARPU. Now, what ways the telcos adopt to increase their ARPU remains to be seen. Currently, the methods seem to be working in favour of the telcos.

Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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