Telecom giants shift focus to tier-based post-paid tariffs to boost revenue

Higher-priced family-pack bundles offer multiple mobile connections, generous data allowances, and subscriptions to popular OTT streaming apps to encourage users to upgrade to higher-ARPU-generation

Indian telecom giants Reliance Jio, Bharti Airtel, and Vodafone Idea (Vi) are strategically encouraging customers to switch to tier-based post-paid tariff plans. This move aims to increase average revenue per user (ARPU) by catering to mobile users with higher data usage, according to a report by the Economic Times (ET).

Recognising the potential for revenue growth in the absence of headline tariff hikes, all three companies are reportedly leveraging post-paid family plans. These plans offer multiple mobile connections and generous data allowances and can even come with subscriptions to popular OTT streaming apps like Netflix, Prime, and Hotstar.

Airtel's premium all-in-one Airtel Black offerings, Jio's post-paid plans, and 5G-based fixed wireless plans are examples of this strategy. With substantial investments in 5G spectrum and network rollouts, telecom operators are pushing higher-priced family-pack bundled offerings, available exclusively on post-paid platforms, to encourage prepaid users to upgrade to higher-ARPU-generating post-paid plans.

On Tuesday, during the company's third quarter (Q3) investor call, Bharti Airtel Managing Director Gopal Vittal asserted that while ARPU has risen organically, the "real improvement" in these metrics would come from "tariff repair." He added that this was not a question of if but of when.

Vi's Q3 ARPU marginally rose to Rs 145, up from Rs 142 and Rs 139 in the preceding two quarters. The company stated that changes in entry-level plans and subscriber upgrades aided this growth.

"In line with the evolving industry landscape and changing customer needs, we have revamped our offerings as well as focusing on our execution to effectively compete in the market, " Vi CEO Akshaya Moondra said in a statement.

This move can also be seen as a necessity for telcos to recover their investments in 5G infrastructure. Jio and Airtel are gearing up to launch 5G services nationally, while Vi plans to follow suit after raising funds to strengthen its 4G coverage and prepare for 5G rollout.

However, the success of the tier-based pricing model may hinge on its adoption by all telcos.

ARPU is expected to have upticks for top telcos post-elections, driven by industry-wide tariff hikes. JM Morgan anticipates 11-12 per cent ARPU increases for Jio in FY25/26, while Citi Research estimates Airtel's ARPUs at Rs 230 - Rs 252 in FY25/26, factoring in a 15 per cent 4G tariff hike from mid-calendar year 2024, added ET.