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Decoding the industry’s consumer postpaid subscribers

Based on the TRAI’s disclosures on machine-to-machine (M2M) subs and overall postpaid subs, we infer that: 1) the industry’s consumer postpaid (retail + corporate) account for a modest ~38m subs (~3.3% of overall subs), but their share in industry revenue is likely higher at ~INR51b (~8%); 2) Bharti accounts for the lion’s share of industry’s consumer postpaid base (~66% in Dec’25), followed by Vi at ~25%; 3) over 60% of Vi’s reported postpaid subs are typically lower-paying M2M subs; 4) RJio’s share in industry’s consumer postpaid subs is likely below 10% (vs. 42% share in the overall wireless subs, ex-M2M); 5) implied consumer postpaid ARPU stood at INR434/month, which is at a significant premium to ~INR181/month ARPU for prepaid subs); and 6) the tariff hike benefits for postpaid subs have been lower at ~5% in the first two quarters after the tariff hike (vs. ~17% rise in ARPU for prepaid subs).

Consumer postpaid subs account for ~3% of the industry’s subscriber base…

* According to TRAI, the industry’s overall postpaid subs base stood at ~98m in Dec’24. Further, we note that M2M subscribers, who are treated as postpaid subs, stood at ~55m in Dec’24.

* This implies that the pureplay consumer postpaid (retail + corporate) subscriber base stood at ~38.5m in Dec’24 (or ~3.3% of overall industry subscribers).

* Driven by the tariff hikes, the industry’s wireless subs base (ex-M2M devices) declined ~27m, since Jun’24. However, we note that the industry’s consumer postpaid base has been more resilient and has been largely stable at ~38m

…but a higher ~8% share in the industry revenue

* As per TRAI, the industry’s access revenue stood at INR628b in Dec’24. Out of which, postpaid subs (incl. M2M subs) accounted for ~INR55b revenue.

* Adjusting for the revenue from M2M subs, we estimate that the industry’s consumer postpaid subs accounted for ~INR51b revenue in Dec’24.

* Compared to a modest ~3.3% share in the industry’s subscriber base, consumer postpaid subs accounted for ~8% of the industry’s revenue as of Dec’24 (though significantly below the ~19% revenue contribution before RJio launch).

Consumer postpaid subs’ ARPU at INR434/month is ~2.4x of prepaid subs

* According to TRAI, the industry’s postpaid ARPU stood at INR192/month (vs. INR181/month ARPU for prepaid subs).

* However, we note that TRAI’s postpaid ARPU reporting has been impacted by the rising share of M2M subs in the postpaid subs category.

* On our estimates, the ARPU for consumer postpaid subs stood at INR434/month in Dec’24, which is almost 2.4x of the prepaid subs ARPU, though significantly below ~6x gap between prepaid and postpaid ARPU in Mar’17 (RJio started charging tariffs).

* Further, we note that compared to ~17% increase in prepaid ARPU over Jun’24- Dec’24, the postpaid ARPU has inched up by a lower ~5%.

* We believe the relatively lower uptick in industry’s postpaid ARPU from the Jul’24 tariff hike (10-17% on entry-level postpaid plans) is likely driven by the delays in effective implementation of the tariff hike for postpaid subs, and we believe consumer postpaid subs ARPU has further room to grow.

Bharti remains the industry leader in consumer postpaid with ~66% share

* Bharti’s postpaid base (incl. M2M subs) stood at ~55m as of Dec’24, accounting for ~57% share in the industry’s overall postpaid subs base.

* Excluding M2M subs, Bharti’s pureplay postpaid subscriber base stood at ~25m, which implies that its share in the higher-value consumer postpaid subscriber base is significantly higher at ~66% in Dec’24.

* Further, we note that Bharti has gained ~420bp market share among consumer postpaid subs over the last two quarters, which is likely one of the drivers for its superior ARPU vs. peers.

* We note that Vi includes M2M subs in its quarterly reporting of postpaid subscribers. Excluding the M2M subs, we estimate Vi’s consumer postpaid subscriber base at 9.7m (~40% of its reported postpaid subs).

* Compared to the persistent decline in Vi’s subscriber base, we note that Vi’s consumer postpaid subs have been stickier, with modest ~0.6m additions from Jun’24 to Dec’24 (vs. ~11m decline in wireless subs).

* Despite multiple interventions to boost its consumer postpaid base, we estimate that consumer postpaid subscribers account for a modest ~1% of RJio’s overall subscriber base (vs. ~5%/7% for Vi/Bharti).

* The quality of the postpaid subscriber base (or their ARPU profile) could be significantly different, given a difference in 1) the entry-level pricing for postpaid plans, 2) mix between retail and corporate subs, and 3) the mix between individual and family plans in the retail postpaid subs.

* However, if we assume postpaid ARPUs to be similar for the three telcos, we estimate that postpaid subs account for ~12-13% of Bharti and Vi’s revenue in 3QFY25, but a modest ~2% of revenue for RJio.

Valuation and View

* Given telcos' preference to increase their postpaid base, the pricing gap between prepaid and postpaid has shrunk significantly in recent years (almost at parity for family postpaid plans). However, we believe there is a potential for telcos to increase the premium for postpaid (vs. prepaid) and thereby improve revenue contribution from postpaid subs.

* Further, we believe the postpaid subscriber base is stickier (with significantly lower churn), can pay a premium vs. prepaid subs (given more flexibility on data usage, content bundling, converged offerings, etc.), and likely deliver better margins for the telco.

* Bharti’s focus on premiumization of its subscriber mix has led to its industryleading ARPUs and sharper improvement in profitability. We continue to like Bharti’s execution on its premiumization agenda.

* We continue to prefer Bharti (BUY, TP INR1,990) and RJio (RIL, BUY, TP INR1,515) in the telecom space.

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