Airtel-Jio new postpaid plans signal higher risk for Voda Idea: Analysts

Kolkata: Bharti Airtel and Reliance Jio’s enhanced family postpaid schemes coupled with unlimited 5G data offerings are set to help them corner more high value customers and revenue share from Vodafone Idea (Vi), especially as the latter hasn’t even launched 5G services, analysts said.
Airtel, they added, could see additional average revenue per user (ARPU) gains, having recently extended the 57% hike in its base prepaid rates nationally to all 22 circles.

“The combination of family plans and unlimited 5G offerings creates an opportunity not just for Jio but also Bharti to continue gaining (revenue) market share in the interim at Vi’s expense since the company is yet to roll out 5G as completion of its crucial capital raise is still pending completion,” Citi Research said.

Analysts said Airtel and Jio’s new 5G and aggressively priced postpaid offerings signal increased risks for Vi as India’s top two telcos can now make strong inroads into Vi’s premium postpaid user segment, which has till date been less sensitive to pricing and sees lower churn than prepaid.

Latest revenue share data collated by Trai show Airtel’s RMS rose 26 basis points (bps) sequentially to 36.2% in the December quarter, FY23, while Jio’s rose 11.2 bps to 41.1%. Vi’s had slipped 54 bps sequentially to 16.8%. The RMS is a measure of overall telecom market leadership. A basis point is 0.01%.

Citi said Vi’s key family postpaid plans are priced at Rs 700/1,000 for 2/4 SIMs (inclusive of select OTT content), which are costlier than the new postpaid offerings announced by Airtel (Rs 600/1,000 for 2/4 SIMs, and inclusive of OTT content) and Jio’s Rs 500/700 (for 2/4 SIMs, but without OTT content). Both Jio and Airtel have also launched unlimited 5G plans starting at Rs 239 a month.

Airtel recently launched a new family plan variant and also unveiled two new all-in-one Airtel Black schemes to counter Jio’s new tariff schemes. All three Airtel schemes combine add-on SIMs at zero cost and premium entertainment benefits. That apart, the Sunil Mittal-telco has also matched Jio by launching an unlimited 5G data offer to all postpaid customers as well as prepaid ones on data plans of Rs 239 and above.

All this, after Jio announced new individual and family postpaid schemes in a determined bid to grab Airtel and Vi’s premium customers and push its own prepaid ones higher up the price ladder.

Around 6% of Airtel’s over 332 million subscribers use postpaid plans, while it’s roughly 10% of Vi’s 228.6 million users. For Jio, the postpaid user base is less than 5% of its overall subscriber base.

Analysts said Airtel had to respond swiftly to Jio’s latest schemes to ringfence its high-value postpaid user base, especially as the market leader’s new schemes are eligible for a 5G upgrade through the Jio Welcome Offer, under which the telco offers 5G services to users who apply for them.

Industry experts, though, said the prospect of higher competitive intensity around 5G could reduce pricing power for operators and as they won’t be able to monetise the next-gen broadband services by charging a premium anytime soon.

“Bharti’s change in pricing is an indicator of price wars that are expected to continue between the two operators for 5G pricing…we think this should persist as telcos aim to migrate subscribers from 4G to 5G and drive churn from Vi,” J P Morgan said.

It added that the launch of aggressive pricing in 5G (unmetered) and new family plans are steps to gain premium users and incremental revenue share. “We anticipate aggressive marketing campaigns will be launched as the (5G) rollouts gather further pace.”

India’s top two telcos are rapidly rolling out 5G networks. Airtel MD Gopal Vittal said the telco would complete its 5G rollout across India by September 2023. Jio is targeting the same by December. Airtel has already provided 5G in 500 cities while Jio has in over 400 cities. By contrast, cash-strapped Vi is yet to even announce 5G rollout timelines.