Telecom major Bharti Airtel on January 24 said it has discontinued the minimum recharge plan of Rs 99 in seven more circles, months after it was scrapped in the two circles of Odisha and Haryana. The move has led to a hike in the price of entry-level plan to Rs 155.
The Rs 99-pack provided users with a limited talk-time, which was deducted from the balance based on the duration of each call. It had a validity of 28 days. Airtel began scrapping the plan since November last year.
With the Rs 99-plan being chalked out, users will have to buy an entry-level unlimited calling pack of Rs 155. This also has a validity of 28 days, and comes along with 1 GB of internet data and 300 SMS.
"In line with our focus on providing better customer experience, we have discontinued the metered tariff and introduced an entry level plan of Rs. 155 with unlimited voice, 1 GB data and 300 SMS. Customer can now use this plan with no constraints. We believe this plan will prove greater flexibility, convenience and superior value," an Airtel spokesperson said.
The fallout of the move, for Airtel customers who recharged with the Rs 99-pack, would be that they would have to shell out 57 percent more on monthly basis. For the company, however, this would result in an increase in the average revenue per user (ARPU).
According to Morgan Stanley, Airtel's higher minimum recharge plans "could eventually be rolled out pan-India over the coming months", and could lead to an estimated revenue accretive of "1.3-1.5 percent".
The company, which is India's second largest telecom player, reported total subscriber base for its countrywide mobile business of 328 million as of September 2022, out of which non-data subscribers were at 109 million, the investment banking firm said in a report.
"Out of this bucket, we estimate roughly 33.40 million could be sitting on the minimum recharge plans, with potential ARPU of Rs 95. Assuming a —48 percent jump in ARPUs from this bucket and potential SIM consolidation of 5-7 million, we think this move could be —1.3-1.5 percent accretive to revenues of Bharti's India mobile business," it stated.
Morgan Stanley further said that it expects "competition to follow suit eventually, which ideally wouldn't disturb market share dynamics".
"Our F24 ARPU/revenue assumptions for India mobile business already takes this into account. We believe the key trigger for the stock is still 4G tariff hikes, the timing of which is uncertain. We assume the same in F25 in our estimates," it noted.
Shortly before the closing bell, Airtel's shares were trading at Rs 775 apiece, which was around 2.3 percent higher as against the previous day's close.
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