*Bharti’s tariff hike limited to only 30% of post-paid subscribers; not a leading indicator to tariff hike in key pre-paid segment*
We spoke with the Bharti management to seek clarification on new post-paid plans; please find below key takeaways:
*a) Old corporate post-paid plans had customers offered discounted rate of INR 199/INR 249; this will now migrate to INR 299 plans*: Mgmt highlighted that prior to these new plans, they had customers at INR 199/INR 249 – these were usually discounted rate given to high volume corporate customers. With implementation of the new INR 299 plans, the INR 199/INR 249 customers will be migrated to INR 299 plan, effectively ending the discounts for those subscribers.
*b) Other corporate post-paid tariff points are unchanged:* Mgmt clarified that other corporate post-paid tariff points (apart from INR 199/INR 249) has been kept unchanged.
*c) Hence, we estimate around 30% of corporate post-paid customers to migrate to INR 299 plan (from INR 199/INR 249)*: Mgmt indicated that it had a uniform distribution of customers across its corporate post-paid plans, ranging from INR 199 to INR 1,599 with blended ARPU of ~INR 350. Hence, we estimate *30% of these corporate post-paid plan customers would have been in the INR 199/INR 249 plan, who would move to the higher plan of INR 299*, implying an effective hike of 30-40% for these subscribers, with other corporate post-paid subscribers being not affected.
Hence, *positive impact to be limited to only 0.6-0.9% of Bharti’s India wireless revenues and 1.5-2% of Bharti’s India wireless EBITDA*, as per our estimates.
Further, *we do not consider these as a leading indicator to the tariff hikes* since
*a) Bharti has largely kept the retail post-paid plans unchanged, with entry level plans intact*, and with a small tweak in the family plan from INR 749 to INR 999.
*b) Hike in prepaid tariffs, which contribute 85-90% of the revenue for Bharti and the industry, are likely to be driven by Jio*: Jio has been aggressive in its subscriber acquisition with the launch of the new Jiophone plans and the new smartphone and is unlikely to participate in a tariff hike unless there is certainty around its 500mn subscriber target. Bharti an VIL has indicated that it won’t initiate a tariff hike since it does not want to lose market share.
By: via @AlliesFin Serve Stock Market
