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Airtel readies value-rich plan to chase high-paying users

The telco is prepared to let go of low-paying customers and derive more revenue from existing ones.

, ET Bureau|
Updated: Aug 16, 2019, 12.23 PM IST
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MUMBAI: Bharti Airtel is ready to shift gears in the tariff game by offering a slew of incentives and services for its high spending, postpaid customers, seeking to sustain its revenue momentum.

On the cards is Airtel Black, for customers willing to pay Rs 999 and more for benefits such as lounge access, better content offerings, discounts on consumer brands, international roaming, health insurance and bundled apps and streaming services.

The telco is prepared to let go of low-paying customers and derive more revenue from existing ones. Customers on low-value plans are the target for Reliance Jio Infocomm, which is targeting 500 million users.

The new value-rich postpaid plan will be part of the ‘Airtel Thanks’ loyalty programme. It is aimed at boosting the postpaid business and driving customers on lower value plans within the Airtel Thanks platform to upgrade to Black and improve customer stickiness.

These lower value plans include Airtel Gold catering to postpaid customers on plans below Rs 499 and Platinum for those at Rs 499 and above.

Bharti Airtel chief executive office Gopal Vittal had said earlier this month that a big makeover in the flagship Airtel Thanks programme was on the cards to drive customers on to higher plans and sustain the company’s average revenue per user (ARPU) momentum.

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Airtel’s upcoming postpaid blitz comes amid Jio’s efforts to bolster its postpaid business by bundling it with its fibre-based home broadband services. Postpaid customers form 4-5% of the telecom subscriber segment and bring in 20% of the revenue, analysts say.

“Jio’s announcement of Postpaid Plus is an attempt towards bundling, which is a first in the Indian market, and Bharti may attempt to replicate it,” Rajiv Sharma, co-research head at SBICaps Securities, said in a note seen by ET.

Airtel’s CEO said on an earnings call this month that the company’s immediate goal is to make it attractive for subscribers to upgrade to higher, value-rich tariff plans that will help sustain the ARPU growth momentum. Airtel did not respond to ET’s queries.

“The carrier is looking to build a loyalty programme to lock in its most premium subscribers before they churn away to competition... to make premium customers feel they are elite, they deserve something extra, which is the ‘stickiness’ strategy here from Airtel to drum up the value proposition,” said Neil Shah, partner and research director, IoT, mobile and ecosystems, at Counterpoint Technology Market Research.

Airtel, with 281.13 million subscribers, is trying to increase its ARPU from the Rs 129, which is now higher than Jio’s Rs 122 and Vodafone Idea’s Rs 108.

Postpaid is a key revenue stream for telcos, contributing 20% of revenue, Brokerage Jefferies said in a report. “If traction for Jio improves, revenues and EBITDA for incumbents will be impacted. A 10% cut in postpaid prices will lead to 2% cut in overall ARPU and will lead to 12%/6% decline in EBITDA for Idea and Bharti, respectively,” Jefferies said.
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