TIL Desk/World/Washington/ As Bharti Airtel and Vodafone Idea seek to shed their low-revenue customer base to improve profitability, they are likely to witness a gradual increase in average revenue per user, say analysts. The move, however, may see over 50 million customers exit the market or switch to other service providers, the analysts added.
During its second quarter results, Airtel said it would stay out of the feature phone and 2G customers base competition to continue its focus on long-term high-end customers. Airtel’s strategy is to raise minimum ARPU through a revised focus on recharge plans (also starting at Rs 35) as well as the rapid rollout of 4G sites to address a smartphone-led subscriber base.
The move is likely to impact 70 to 100 million of its low ARPU user base, according to initial estimates. ‘The introduction of the new Rs 35 minimum monthly recharge will impact the 2G voice-only users, lifting this cohort from around Rs 20 at present. This, plus the loss of lower-end subscribers, should result in the average blended ARPU for Bharti increasing by 12 per cent to Rs 113. Vodafone Idea may see its ARPU increase by 14 per cent to Rs 101,’ stated Bernstein analyst Chris Lane in a note to investors.
