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Bharti Airtel revised plans

* Bharti has raised the postpaid tariffs for its corporate plans as well as tweaked its retail postpaid and select prepaid plans; as per our estimates, this change in plans can result in 3% increase in Wireless EBITDA.

Modification of corporate plans

* Tariffs in minimum corporate plans have been increased by 30%.

* It has discontinued old plans at INR199–249, with the minimum plan now starting at INR299.

* Assuming average ARPU of INR225 for old plans, the hike in this category would be 30%.

Retail postpaid plan tweaked marginally

* INR249 add-on plan increased to INR299 (+20%): The INR249 plan offering 10GB data has now increased to INR299 with 30GB data, implying an increase of 20%.

* INR749 plan increased to INR800 (+7%): Earlier, subscribers could acquire two SIM cards at INR749, with the implied value amounting to INR325. With the 749 plan now being discontinued, the customer could make a purchase of INR499 with an add-on of INR299, implying a total value of INR800, i.e., an INR50 increase in ARPU (7%).

* Number of users for INR999 plan down to three from four (+20%): With the INR999 plan, the customer earlier received four SIM cards (three regular SIMs and one data-only SIM). This has now been reduced to three SIM cards only, without the data-only SIM card.

* Vodafone Idea’s plans are thus far aligned with Airtel’s old plans. On the other hand, RJio’s postpaid plans start at INR199, but have limited traction. We expect Vodafone Idea to follow suit.

Overall impact on revenue/EBITDA

* Postpaid contributes about 5% to subscribers and 12% to revenues. Of this, the split between corporate and retail stands at 50:50. Average ARPU may increase 20–25% to INR400 v/s overall company ARPU of INR145 in 4QFY21. Of this, retail may see a lower increase of 15–20%, while corporate may see a moderately higher increase at ~30%.

* With a 20–25% ARPU increase in the Postpaid category, which contributes 12% to revenue, the overall increase in revenue/EBITDA could be to the tune of ~3% – assuming a 60% incremental margin for the Wireless business. However, at the consol level, the company would see an increase of 2%

* This benefit is based on the assumptions that (a) a tariff hike would be announced by peers, resulting in limited churn, and (b) the rate of churn would be lower in the Postpaid category.

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