Whalesbook
The Incremental ARPU Drive
Bharti Airtel has made a small price adjustment to one of its key 84-day prepaid plans. The cost of the plan offering 1.5 GB of data daily has risen from ₹859 to ₹899. This change makes the ₹899 plan Airtel's main option for longer-validity prepaid services. The plan still includes unlimited calls, 100 SMS daily, and 1.5 GB of high-speed data, which slows down after the limit. While benefits like Adobe Express Premium access and free Hellotunes remain, the RewardsMini subscription, previously part of the ₹859 plan, has been removed. This suggests a slight decrease in the total value bundled with the plan. By increasing the price of just one plan, Airtel is adopting a careful approach to gradually boost its average revenue per user (ARPU) and encourage customers towards 5G, rather than making a sweeping tariff increase that could lead to customers leaving.
Competitive Pricing and 5G Push
India's telecom market is fiercely competitive, with companies focused on gaining subscribers and increasing average revenue per user. Reliance Jio offers a similar 84-day plan for ₹799, including 1.5 GB daily data, unlimited calls, 100 SMS, and subscriptions to JioTV and JioCinema. Vodafone Idea (Vi) has an ₹859 plan with comparable data and call benefits, plus extra data, night data offers, and entertainment subscriptions. Bharti Airtel currently leads the market in ARPU at ₹259 for Q3FY26, ahead of Jio's ₹213.7 and Vi's ₹186. Analysts expect the sector's ARPU to climb to about ₹220 by the end of FY26, fueled by 5G adoption and customers choosing higher-tier plans. Airtel's approach seems to be testing how much customers are willing to pay for its services, while also pushing for a move to its 5G network. This is seen as vital for future earnings, especially as operators look for new revenue streams. Airtel's longer-term goal is to reach an ARPU of ₹300.
The Bear Case: Margin Squeeze and Stagnant Growth
Despite efforts to raise ARPU, Airtel faces hurdles. The ₹30 price increase on one plan is unlikely to significantly change its total revenue soon. Removing the RewardsMini subscription, though small, might upset some customers looking for the best value. Rivals like Reliance Jio, with its competitive ₹799 plan, continue to offer appealing bundles, which could attract price-sensitive customers away from Airtel's more expensive choices. While Airtel leads in ARPU among major Indian telcos, its performance for the fiscal year 2026 has seen a drop of -15.64%. This could indicate market challenges or investor caution, even with positive analyst recommendations. The company's stock has also seen a -2.23% change in the past year. Analysts still rate the stock as 'Buy' with a target price of ₹1,900, suggesting potential growth. However, the sector anticipates another round of price increases by July 2026, which might strain consumer budgets and slow subscriber growth if not handled carefully. The removal of bundled extras like RewardsMini could be seen as a sign of pressure on Airtel's profit margins, even if the company aims to optimize ARPU.
Future Outlook and Analyst Sentiment
Analysts expect Bharti Airtel to keep its leading ARPU position, helped by ongoing transitions to 4G/5G and a beneficial pricing climate. Analysts at Nirmal Bang have reaffirmed a 'Buy' rating, with a target price of ₹2,525, pointing to strong subscriber growth and better profit margins. Crisil Ratings has upgraded Airtel's rating to 'Crisil AAA/Stable', recognizing its growing market share in revenue and ARPU. The company's focus on its Home/Digital sector and investments in data centers are also expected to drive future growth. Overall, the outlook appears positive, with ARPU growth seen as a main factor for earnings. Telecom companies rely heavily on ARPU for stable profits and to support major investments in network infrastructure, especially for 5G.