Airtel looks to grow 5G subscriber base, ARPU with reverse smartphone bundling deals

The Sunil Mittal-led company recently signed an exclusive partnership with Xiaomi’s sub-brand Poco to bring down the 5G smartphone price to Rs 8,799, along with data bundling

Bharti Airtel is actively pushing for the adoption of its 5G services and exploring exclusive partnerships with smartphone manufacturers, particularly focusing on price-sensitive customers in the country.

The move also aims to increase data consumption on its network, which will help increase average revenue per user (ARPU). Airtel, which had an ARPU of Rs 208 in the third quarter, aims to increase it to Rs 300.

The Sunil Mittal-led company recently signed an exclusive partnership with Xiaomi’s sub-brand Poco to bring down the 5G smartphone price to Rs 8,799, along with data bundling. It is now in talks with other smartphone makers for similar partnerships, especially in the sub-Rs 10,000 price segment, sources told Moneycontrol.

Airtel has been trying this with Poco since last year when they successfully launched Poco C51 exclusively for 5999 to move those long-tail 2G users to upgrade to 4G networks. This strategy continues with the Poco M6 5G.

“One of the key barriers to 5G has been expensive devices. Now, with chipsets becoming cheaper, 5G smartphone prices are also coming down, and Airtel is trying to cash on the opportunity with handset partnerships to get more customers to use its 5G network,” a company source Moneyconytrol on the condition of anonymity.

The person said Airtel and its partners are trying to sweeten the offering by bundling 5G data, discounts, and cashback offers. This arrangement effectively brings the cost down below Rs 10,000.

The POCO M6 5G Airtel Exclusive variant is locked with Airtel prepaid and is currently the cheapest 5G smartphone in the country.

“Airtel would like to work more with handset brands for their lock-in program. As they acquire more smartphone users, brands will gain access to the telco’s vast subscriber base,” another company source said. The source added that Airtel is also leveraging its offline retail channel to promote these offers and grow its 5G user base.

A query sent to Airtel didn’t elicit any response.

“There is definitely an affordability problem with 5G handsets, impacting 5G growth. Telcos have to bring cheaper 5G phones. If you wait for Qualcomm or Mediatek to reduce pricing, it will take time. It is a 1-2 year cycle. Telcos will have to come up with innovative bundling strategies,” said Shiv Putcha, founder and principal analyst at Mandala Insights.

Putcha added that reverse 5G bundling deals where a phone is locked to a telco’s network for a certain time frame resemble the bundling deals for their 4G services that telcos previously offered, which facilitated the transition of subscribers from 2G/3G to 4G to an extent. “Airtel can project good volumes to handset brands, making it easier for brands to drive smartphone sales in the sub-Rs 10,000 category,” he added.

Neil Shah, vice president of research at Counterpoint Research, said that handset bundling will drive and guarantee consistent ARPU for Airtel in exchange for an aggressive device price.

India’s second-largest telco has around 65 million 5G users.

In the recent earnings call, Airtel’s managing director Gopal said that 5G users in the overall smartphone base are still low at about 15-16 percent. “We expect that by March 2025, the industry will see about 25% of smartphones that are 5G enabled,” he had said.

Without any headline tariff increases, Airtel also aims to boost data consumption on its network through these handset offerings. To avail of the benefit, users must recharge with Rs 199 or above unlimited plans for 18 months. The company source said this strategy encourages users to upgrade to high-tier plans, helping the telco increase average revenue per user (ARPU).