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Nachiket Kelkar
Nachiket Kelkar

PREPAID PLANS

Attractive offers by Jio, competition trigger exodus to prepaid plans

AFP_NQ4J6 A key reason behind increasing prepaid revenue maybe that a large portion of Reliance Jio's subscribers are prepaid

Attractively priced prepaid offerings by telecom companies, which includes unlimited calls and much higher high-speed data benefits maybe pushing postpaid subscribers to shift to prepaid plans, according to a study.

The recent performance indicators report released by Telecom Regulatory Authority of India shows, postpaid segment revenue in the July-September quarter declined nearly 10 per cent compared with the quarter ended June to Rs 5,900 crore, while prepaid segment revenue increased 9 per cent to Rs 24,000 crore, according to the analysis by Kotak Institutional Equities. 

Postpaid contribution to industry revenue has fallen back to historical levels of around 20 per cent, the analysis adds.

A key reason behind increasing prepaid revenue maybe that a large portion of Reliance Jio's subscribers are prepaid. However, also notable is that to counter Jio's plans, incumbent operators have launched similarly priced prepaid plans, which offer unlimited voice calls, and 1GB or more 4G data per day, at various price points and for various durations. These plans are fairly attractive compared with postpaid plans. 

For instance, Bharti Airtel is offering unlimited calls and 10 GB of high speed data per month for Rs 349 postpaid plan. In comparison, the same company's prepaid plan of Rs 349 gives subscribers unlimited calls and 2 GB per day high speed data for 28 days.

Similarly, on a Rs 458 prepaid plan, Vodafone offers unlimited calls and 1 GB of high speed (4G/3G) data per day for 70 days. A similarly priced postpaid plan will cost Rs 499, where subscrbers get unlimited calls and 20GB of free internet quota for a month. 

“The disproportionate pricing decline in prepaid segment has created a material price-value gap between prepaid and postpaid offerings and we believe this has now started reflecting in pressure on postpaid revenues in the form of a certain set of customers choosing to move to prepaid and price corrections and retention discounts in the postpaid segment,” said the Kotak analysts.

Of total 1.17 billion subscribers end of September (GSM and 4G LTE together), prepaid subscribers accounted for 95.59 per cent. 

In the September quarter, the average revenue per user (ARPU) per month for prepaid segment rose to Rs 71 from Rs 65 in June, while ARPU per month postpaid segment declined to Rs 361 from Rs 389, according to TRAI. 

In the September quarter, adoption of 4G LTE continued with the LTE subscriber base increasing 37 million quarter-on-quarter to 197 million. Industry data volumes stood at 5.6 billion GB, up 29 per cent sequentially; LTE contributing to 80 per cent of the total data volumes, the Kotak analysts said. 

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