Airtel, Vi may too race against Jio for postpaid offerings: Analyst
By MYBRANDBOOK
Bharti Airtel and Vi are too expected to get in the post paid plans rat race to match Jio’s latest plans
Analysts believe that any major subscriber churn in Airtel’s existing postpaid subscribers is unlikely, given its premium brand positioning and typically lower churn in the segment. The Sunil Mittal-led telecom operator recently changed its broadband plans by matching Jio’s fixed-line broadband plans with unlimited data.
“Bharti Airtel’s effort to convert its prepaid customer base to postpaid may witness challenges with the increased competition from Jio,” financial service company, Credit Suisse said in a note.
Credit Suisse, however, said that Vodafone Idea may witness higher churn in the postpaid segment as the ongoing network integration exercise has caused bad experiences in some key services areas.
Among operators, Vodafone Idea has the highest 43% market share followed by Bharti Airtel at 28%.
Jio’s new plans range from Rs 399 to Rs 1499. Airtel’s post plans start at Rs499, while Vodafone Idea begins from Rs399. Jio's Postpaid plus plans add OTT bundling worth an additional (Rs233) at the starting price of Rs399 per month, Rs100 lower than Bharti and Vodafone Idea comparable plans.
“We expect Bharti and Vi to match Jio's OTT bundling to prevent churn of their postpaid subs rather than a headline price drop. The cost of matching OTT offers is likely to depend on wholesale discounts (we estimate 30-70%) and activation by eligible customers,” J.P Morgan said in a separate note.
“We estimate this could cost Bharti and Vi 1-3% and 3-6% of FY21 EBITDA respectively,” it added.
J.P Morgan stated that Jio’s goal is upgrading its personal 280 million smartphone subscribers to postpaid and better ARPU plans. “This could help nudge the overall market to higher ARPUs and be a positive for the industry.”
Jio at present has lower than 1% of its wi-fi subscriber base on postpaid plans.
Analysts stated that Jio’s new plans come at a 20% low cost to Bharti Airtel, and the postpaid pricing adjusted for OTT bundling seems to supply 50-33% decrease prices as in comparison with pay as you go plans of comparable headline pricing and knowledge limits.
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