Bharti Airtel raises Prepaid Tariffs as it stresses ARPU

In a development that might see a cascading effect, Bharti Airtel has raised the tariff of several of its 4G plans across categories. The second-largest telco in the country has said that it "has always maintained that the mobile Average Revenue Per User (ARPU) needs to be at Rs 200 and ultimately at Rs 300, to provide a reasonable return on capital that allows for a financially healthy business model".

Bharti Airtel Increases Prices Across the Board

The telco has raised the prices of one of its entry-level plans, 11 of the normal 4G plans, and 3 data top-up plans.

First off, the entry-level plan that offers 200 MB data, 1 paisa/second voice calling, has gone from costing Rs. 79 to Rs. 99. However, the telco has increased the Talktime to Rs. 99 as well, thereby reducing the impact of the price hike.

Interestingly, Airtel has increased the prices of many of its most popular plans.

Looking at the table, the telco has increased the prices of some of the most commonly purchased data packs. Specifically, the Rs. 299 and the Rs. 359 plans, that offer unlimited voice, 100 SMS/day, and 1.5 and 2 GB data per day, respectively. Those two plans are two of the most popular 4G plans in the telecom sector. In comparison, Jio and Vi are, currently, offering these plans at far lower price points. Airtel's Rs. 299 plan costs Rs. 199 on Jio's network, and Rs. 249 on Vi's network.

What's more, Airtel has raised prices by as much as Rs. 501 on its more expensive plans. Given the number of users that have been, and will, buy these plans, the telco has taken a huge risk.

Desperate Times, Desperate Measures

In terms of financial performance, Bharti Airtel had a fruitful second quarter. Airtel also had the best APRU during the quarter at Rs. 153, up 6.5% on a yearly basis. The telco cited its “strategy of focusing on quality customers” for the said increase in its ARPU, which continues to be the highest in the industry. Apart from the sheer subscribers’ count, Airtel has also managed to outdo Jio in a couple of crucial subscriber engagement metrics. The Sunil Mittal-led telco reported average data usage per customer at 18.6 GB/month and voice at 1,053 minutes/month. For comparison, Jio reported per user per month voice and data consumption reached 840 minutes and 17.6 GB, respectively.

However, the telco, under financial stress due to the fiercely competitive telecom market, accepted the 4-year moratorium for all dues last month. The move should also see Bharti Airtel gain cash flow savings of Rs. 35,000-40,000 crore annually. Even though the telco managed to outperform Reliance Jio in almost every metric except the number of users, it is under a lot of debt. Most of this debt is due to the government, incidentally. Currently, Airtel and the government are engaged in a legal battle over the issue of AGR. Along with the AGR case, the telco also has a lot of money stuck in other litigations.

Earlier, Bharti Airtel Chairman Sunil Mittal had said that given the "extraordinary debt" the telco is under, he will not shy away from raising prices.