Airtel raises minimum prepaid plan to Rs 79, offers more usage time

Company is the first to raise tariffs and its rivals are likely to follow suit, say experts.

Bharti Airtel chairman Sunil Mittal seems to have walked the talk as the New Delhi-based telco on Wednesday raised the entry-level tariff by more than 60 per cent in a disruptive telecom market. The minimum recharge plan tariff has gone up from Rs 49 to Rs 79 for prepaid customers, who constitute close to 95 per cent of its 340-million mobile user base.

The move comes within weeks of Mittal claiming that his company would not hesitate to undertake a tariff hike. While he maintained that tariff hikes could not be done unilaterally and that other telcos must join in, Bharti Airtel has taken a lead in biting the bullet. Building up to the hike in the bread-and-butter prepaid category, the company had revised the postpaid tariffs recently.             

Post announcement, Bharti Airtel’s stock rose 5 per cent on the BSE, finally settling at Rs 567.90.

The move is sure to have a bearing on the overall telecom market, which has been in the midst of piling debts and losses due to rock bottom prices. The last tariff hike by the three companies—Airtel, Reliance Jio and Vodafone Idea-- was in December 2019.

Analysts said the increase in Bharti Airtel's subscribers and rise in tariff can together lead to an upward movement in its Average Revenue Per User (APRU), which was at Rs 145 end of March. The other two private telcos—Vodafone Idea and Reliance Jio—too would be forced to raise their tariffs after the Airtel announcement as all players get most of their volumes and revenues from the pre-paid segment, according to industry executives.

Cash-strapped Vodafone Idea, which is seeking staggered payment option for spectrum fee instalments and is struggling to remain a going concern, is expected to follow Airtel soon in raising tariffs, sources said. Vodafone Idea and Bharti Airtel had recently suffered a setback when the Supreme Court had refused to allow recalculation of dues linked to adjusted gross revenue (AGR).        

"Airtel has discontinued its Rs 49 entry level recharge plan," the company said in a statement. Its prepaid packs will now start from the Rs 79 Smart Recharge and offer up to four times more outgoing minutes of usage to customers along with double data.

While the earlier postpaid corporate plans started at Rs 199, they were revised to Rs 299 recently.

According to the April telecom subscription data by the Telecom Regulatory Authority of India (Trai), Vodafone Idea (Vi)  lost 1.8 million users in the month of April, after gaining subscribers for two months. Reliance Jio added 4.8 million wireless users in April and Bharti Airtel added 0.5 million.