Bharti Airtel’s prowess in the postpaid segment has once again proven its mettle as it achieved an extraordinary feat in the first quarter of FY24. With an impressive addition of 0.8 million net postpaid subscribers, Airtel solidified its position as a leader in the postpaid domain. What sets this achievement apart is the fact that even in the face of fierce competition, including enticing free trials and bundled benefits, Airtel managed to consistently attract new postpaid users. As a result, the telecom giant expanded its customer base to an impressive 40.4 million, which also includes IoT subscribers.
Airtel’s Ascending ARPU Trajectory
The first quarter of the financial year 2023-2024 brought forth notable insights during Bharti Airtel’s earnings webinar. Gopal Vittal, the Managing Director and CEO, offered a glimpse into the postpaid segment’s trajectory and the strategies being employed to enhance essential metrics, such as the Average Revenue Per User (ARPU).
The ARPU witnessed a significant rise from Rs 193 to Rs 200, supported by a remarkable net addition of 833,000 subscribers. This achievement catapulted Airtel to possess the highest ARPU in the Indian telecom market, marking a significant milestone. This accomplishment is in line with the short-term target set by the company a few years ago. Gopal Vittal noted that this success serves as a stepping stone toward the next goal: an ambitious long-term target of achieving an ARPU of Rs 300.
The Power of Brand Value and Service Quality
Airtel’s ability to attract users to its postpaid services is a testament to its brand value and commitment to quality service. This achievement becomes all the more impressive when considering that it was attained without resorting to cut-rate offerings or compromising the service’s intrinsic value. This underscores the trust customers have in Airtel’s offerings and its reputation for providing superior service.
A Plethora of Postpaid Offerings
Familiar to readers of TelecomTalk, Airtel’s postpaid services encompass an array of offerings. These include standalone postpaid plans under the Infinity brand, as well as Airtel Black offerings, which provide comprehensive services bundling DTH, broadband, and mobile connections.
The Premiumization Approach
The impressive surge in ARPU can be attributed to several factors. Notably, the transition from prepaid to postpaid services leads to a doubling of the ARPU. Gopal Vittal highlighted this trend during an earnings call, emphasizing how Airtel’s Infinity Family postpaid plan has garnered significant popularity, with a substantial proportion of users opting for family plans. Furthermore, the shift from the entry-level Rs 99 to Rs 155 pricing point also contributed to the elevation in ARPU.
The Role of 5G and Data Monetization
Airtel’s focus on 5G has also played a pivotal role in driving the growth of its postpaid user base. The anticipation surrounding 5G network adoption has attracted early smartphone adopters to Airtel’s network, presenting an opportunity for the company.
Another crucial driver of increased ARPU is data monetization. Customers are seamlessly opting for data packs when their data allowances run low, which contributes significantly to ARPU growth.
Migration from Feature Phones to Smartphones
The migration of users from feature phones to smartphones has also been a catalyst in increasing ARPU. The entry-level feature phone plan at Rs 155 transforms into an entry-level smartphone plan priced at Rs 239, resulting in an impressive 50% ARPU increase for users making the switch.
A Promising Outlook for Postpaid
Gopal Vittal envisions a bright future for the postpaid segment, noting that the potential for growth is substantial. Currently, postpaid users constitute approximately 6% of the user base, a percentage that is higher in other markets. He anticipates that India will increasingly move towards postpaid services, driven by factors such as the growth in prepaid to postpaid transitions and users switching from competitors.
Bharti Airtel’s strategic initiatives have propelled its postpaid segment to impressive heights. The telecom giant’s focus on enhancing ARPU through premiumization, effective offerings, and technological advancements such as 5G demonstrates its commitment to providing exceptional value to its customers. As Airtel continues to pioneer the industry, its leadership in the postpaid domain is poised to have a lasting impact on the Indian telecom landscape.
