After scrapping the entry-level recharge plans for its prepaid subscribers, Bharti Airtel has now dropped low-valued postpaid plans as well. The second largest telecom provider in the country has now scrapped all postpaid plans priced below Rs 499 in a way to boost its average revenue per user. This is the newest move in an ongoing effort to revamp the business, which has seen profits and margins decline since the entry of Reliance Jio. The Sunil Mittal-led operator is taking this move in order to lower costs and boost profitability in the long term.
Bharti Airtel has also halved the total number of postpaid options to four to attract higher paying user segment. The operator has now made Rs 499 as an entry point for its postpaid subscribers, and has discontinued entry-level postpaid plans price at Rs 299 and Rs 399 along with high value plans with monthly rental of Rs 649, Rs 1,199 and Rs 2,999. The four plans now offered by the operator are priced at Rs 499, Rs 749, Rs 999, and Rs 1,599 respectively.
The report notes that postpaid customers in the Rs 499 plan make up for only 5 to 7 percent of its over 284 million subscriber base but contribute 20 to 25 percent of the revenue. The move could result in Airtel losing some more subscribers in the short term while increasing revenue in the longer term. The revamped postpaid plan offering reportedly came into effect from May 1, 2019 and the change can be seen on MyAirtel app.
The company is believed to be offering the Rs 349 postpaid plan to limited users in a few circles and will likely phase out for those users too. “Everything comes at a cost, and if you want to give better customer experience, you need to cover those costs. This enables telcos to offer better customer experience at a price point which is acceptable to clients and gives some sort of margins. You want to simplify plans for customers,” Bharat Bhargava, partner, telecom advisory services for EY, told ET.
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Bharti Airtel and Vodafone Idea Ltd are under immense financial pressure from Reliance Jio, which has grown to become the third largest operator in just two years. Jio has already managed to beat rival Vodafone in terms of revenue market share and it’s average revenue per user is leading the industry right now. The report notes that Airtel has improved its ARPU in the last two quarters to around Rs 125 while Jio managed ARPU of Rs 126.2 during the same period.
With Rs 499 postpaid plan, Airtel offers unlimited calls, 75GB data with roll over facility and free access to Netflix for three months and Amazon Prime Video for a year. The Rs 799 plan comes with 125GB data while the Rs 999 and Rs 1599 postpaid plans offer 150GB and 500GB data respectively. All these plans offer unlimited roaming and 100 SMS. It also bundles additional services like mobile security and VIP customer service.