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Shares of Bharti Airtel moved higher by 5 per cent to Rs 570.5 on the BSE in the intra-day trade on Wednesday after the country's premier communications solutions provider upgraded its prepaid plans and discontinued its Rs 49 entry level prepaid recharge. The revised plans will be effective from Thursday, July 29.
"The company's prepaid packs will now start from the Rs 79 smart recharge and offer up to four times more outgoing minutes of usage to customers along with double data," Bharti Airtel said in a press release.
Airtel further said, this change is in-line with the Company’s focus on offering superior connectivity solutions. Airtel customers on entry level recharges can now stay connected for longer without worrying about their account balance. READ ABOUT IT HERE
In the past one week, the stock of Airtel has outperformed the market by gaining 8 per cent as compared to a marginal 0.09 per cent rise in the S&P BSE Sensex.
Last week, on July 22, Bharti Airtel had raised the postpaid tariffs for its corporate plans as well as tweaked its retail postpaid and select prepaid plans. Tariffs in minimum corporate plans have now been increased by 30 per cent. It has discontinued old plans at Rs 199–249, with the minimum plan now starting at Rs 299.
Postpaid plans, according to the company, contribute about 5 per cent to subscribers and 12 per cent to revenues. Of this, the split between corporate and retail stands at 50:50. "Average revenue per user (ARPU) may increase 20–25 per cent to Rs 400 v/s overall company ARPU of Rs 145 in Q4FY21. Of this, retail may see a lower increase of 15–20 per cent, while corporate may see a moderately higher increase at around 30 per cent," Motilal Oswal Financial Services said in a report.
With a 20–25 per cent ARPU increase in the postpaid category, which contributes 12 per cent to revenue, the overall increase in revenue/Ebitda could be to the tune of around 3 per cent – assuming a 60 per cent incremental margin for the Wireless business. However, at the consolidated level, the company would see an increase of 2 per cent. This benefit is based on the assumptions that a tariff hike would be announced by peers, resulting in limited churn, and the rate of churn would be lower in the postpaid category, the brokerage firm said.
