Bharti Airtel shares dropped nearly 1% on Thursday after the company removed several prepaid plans. The move nudges users toward higher-priced options, a strategy analysts believe will increase Average Revenue Per User (ARPU). Investors are now monitoring the impact on subscriber retention and potential pricing responses from competitors.
Bharti Airtel shares saw a modest decline of approximately 1% in early trading on Thursday. The stock movement follows the company's decision to discontinue several prepaid plans, including packs priced at Rs 299, Rs 319, Rs 579, Rs 619, and Rs 649. This move is part of an ongoing effort to simplify the company’s pricing structure and encourage users to opt for higher-value services.
Impact of Plan Rationalization
By removing these specific entry-level and mid-range options, the company is effectively guiding subscribers toward more expensive alternatives. For instance, customers previously using the Rs 299 plan are now being directed to the Rs 349 plan. While this transition results in a price increase of approximately 16% to 17%, the company has also increased the data offering to 2 GB per day, compared to the 1.5 GB offered in the earlier plan.
Analysts at Citi have maintained a 'Buy' rating on the stock with a target price of Rs 2,230. The brokerage estimates that these adjustments could boost the company's Average Revenue Per User (ARPU) by roughly Rs 4 per month. ARPU is a critical metric for telecom operators, representing the average income generated from each subscriber. In its recent first-quarter results for FY27, Bharti Airtel reported a mobile ARPU of Rs 264 and a consolidated net profit of Rs 8,167 crore, representing a 37.3% increase compared to the same period last year.
Risks and Market Monitoring
While the plan rationalization is aimed at improving profitability, it introduces specific business risks. One primary concern is the potential for customer churn, where subscribers might leave the network if they perceive the price hikes as too steep, especially if they do not require the additional data offered in the higher-priced packs.
Another significant monitorable is the competitive response. Bharti Airtel’s success in pushing these higher tariffs depends partly on how its main competitors, such as Reliance Jio and Vodafone Idea, adjust their own pricing strategies. If these rivals maintain lower prices for similar data packages, Bharti Airtel could face pressure to either roll back changes or risk losing market share. Investors are also watching for any regulatory signals regarding these tariff adjustments, as any perception of 'stealth' price hikes that bypass formal industry-wide increases can sometimes draw public or regulatory attention. Moving forward, shareholders will likely track the company’s ability to manage customer retention while sustaining the momentum in ARPU growth.