However, a significant increase in ARPU will happen only when tariffs are raised, which is not expected before the general elections next year, said analysts.
“ARPU improvement initiatives from telcos are in the form of blocking incoming calls in case the customer does not top up and allowing data top-ups only thrice after the expiry of validity period of a voice & data plan,” brokerage IIFL said in a recent report.
The idea is to ensure that users recharge their plans promptly on expiry, thus ensuring a steady flow of revenue, analysts said. Limiting data top-ups, on the other hand, pushes customers to upgrade to higher-priced data plans with larger allocations, industry executives and analysts said.
Telcos usually offer some grace period after the validity, or expiry date of the plan, is over. However, Bharti Airtel has been the most stringent in blocking incoming calls, said the IIFL report.
Not a Long-term Solution: Experts
Blocking incoming calls for customers who have not topped up even after the grace period is an industry practice now, and the grace period offered by each telco has been communicated to the Telecom Regulatory Authority of India, said industry executives.
Both Bharti Airtel and Jio have reported marginal to flat ARPU growth for the fourth quarter of 2022-23. Bharti Airtel’s ARPU was flat quarter-on-quarter at Rs 193, while Jio’s ARPU increased marginally to Rs 178.8 from Rs 178.2 in the previous quarter. Vi is yet to disclose its financials for the quarter ended March 31.
Bharti Airtel, which wants ARPUs to increase to Rs 300 in the medium term, Jio, and Vi did not respond to ET’s queries on the matter till press time.
“Telcos should carefully evaluate their implementation (of such strategies to increase ARPU). Balancing customer satisfaction and revenue growth is crucial to maintain a positive customer experience and retain a loyal subscriber base,” said Murtuza Kachwala, managing director, Protiviti Member Firm for India.
Experts also said that measures around stopping incoming calls or restricting the number of data tops could serve as stopgaps at best, and do not offer a long-term solution for significant APRU growth.
“While these measures help increase ARPU in small amounts, as is evident from the fiscal fourth-quarter numbers, only headline tariff hikes can help bring significant growth on the metric,” said an analyst with a leading brokerage, who did not wish to be identified.
However, with the general election slated for the first half of 2024, the next round of tariff hikes can be expected only after the election, said analysts.
Both Vi and Bharti Airtel have voiced their concern over pricing, with Bharti Airtel chief executive Gopal Vittal calling India’s telecom pricing structure “broken” in the company’s latest earnings call.
Earlier this year, Vi chief Akshaya Moondra said the tariff norms in the country need to change from a one-size-fits-all structure to ‘pay for what you use’ structure.
India last saw tariff hikes across the three telcos in November-December 2021. Since then, there has been no significant increase in prepaid tariffs. In November 2022, Bharti Airtel started raising the tariff of its entry-level packs from Rs 99 to Rs 155 in Haryana and Odisha markets, and has now done so across 22 circles.
There was some expectation of a postpaid tariff hike considering the difference between prepaid and postpaid pricing has narrowed down considerably. This too is now on the back burner, analysts said, since Jio has ramped up its efforts to corner a larger market share in the postpaid segment through aggressively priced plans, a strategy Reliance Industries president Kiran Thomas reiterated in the company’s fourth-quarter earnings call.
