Airtel cuts data price by 33% as Jio trial offer hurts data growth

Redefining its value proposition, company has come out with two data packs, which are designed to lock in users and drive higher usage

In a bid to defend its data marketshare, the country's largest telecom company Bharti Airtel has come out with prepaid data packs that are intended to drive higher usage among the prepaid consumer base. The packs allow unlimited data at Rs 51/GB, provided the consumer makes an upfront commitment of Rs 1,499. It is evident that Airtel is seeking to prevent the upper end of the market from moving to a rival's network by throwing in more benefits for the same price.

Ever since Jio's free trial offer has been broad-based, the data usage of incumbents has been on the wane. According to Bank of America Merrill Lynch, recent discussions with industry participants and checks suggest that the data growth of existing incumbent operators is getting impacted, albeit not significantly from Jio's free data/voice offering in its test phase. This is expected to continue till the trial offer lasts.

This possibly explains Airtel's two data packs, which are designed to lock in users and drive higher usage. The Rs 1,498 pack offers 1GB 4G/3G data upfront with a validity of 28 days. Post exhaustion of this data limit, the customer can enjoy 1GB 4G/3G recharges for just Rs 51 over a period of 12 months. There is no limit on the number of recharges during the period and higher the number of recharges the more value a customer gets.

Ajay Puri, Director - Operations (India & South Asia), Bharti Airtel said, "With these innovative packs, we are redefining the value proposition on our data packs and allowing our customers get a lot more within the same budget."

If the consumer uses 1GB per month, then under this plan the consumer stands to save merely 33%. At regular prices, a consumer will spend Rs 3,000 for 1GB data every month. With this pack, the consumer will spend Rs 2,060 for the same amount of data in a year. Savings will increase if the usage goes up. The packs are designed mainly for the upper end of the market. However, given that 43% of the prepaid market makes recharges of Rs 10 and account for average monthly revenues of Rs 170, Airtel's data packs are only for the top end of the data market as it is seeking an upfront commitment of Rs 749 or Rs 1,499.