AGR dues strike: Airtel and Vodafone to hike prepaid plan rates.
AGR dues are back again, Airtel & Vodafone are prepping up to hike prepaid plan rates to cover the same. The Goldman Sachs analysts also project that “Airtel could really be the first operator to for the most part raise very prepaid pricing in the actual prepaid smartphone segment this month” and literally see “an increasing likelihood that Vi will particularly follow its lead” in a sort of big way.
The prepaid smartphone segment actually is one of the most lucrative for Bharti Airtel and Vodafone Idea (Vi) in a major way. As a result, analysts said, they will literally be bolstering resources and generating pretty much more cash so they can for the most part meet upcoming adjusted gross revenue (AGR) obligations in a major way.
According to analysts, both companies’ earnings will be significantly upgraded in the future if the prepaid 4G smartphone market grows.
Airtel & Vodafone: AGR Dues
In a move that made its entry-level plan 60% more expensive, Airtel removed its Rs 49 entry-level plan for prepaid users on Wednesday. Vi is expected to follow suit over the next few days by discontinuing its Rs 49 pack nationwide. In some markets, Vi already has a presence. Now, they want to fund the AGR dues.
In order to generally meet their upcoming adjusted actual gross revenue AGR dues and very other obligations, analysts basically are predicting that Bharti Airtel and Vodafone Idea (Vi) will increase smartphone prices in the lucrative particularly prepaid segment.
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The prepaid 4G smartphone market accounts for the bulk of telco revenue, so analysts predict that earnings upgrades for both companies going forward will be more substantial if this segment grows.
Analytics of Prepaid Plans
As analysts expect, Vi will also discontinue its Rs 49 pack at the pan-India level in the next few days after Airtel discontinued its Rs 49 plan for prepaid users, increasing its entry-level plan’s cost by 60% to Rs 79. The company has already begun to expand in some markets.
Telecom regulators recorded Airtel having 348.29 million subscribers at the end of May, while Vodafone Idea had 277.62 million in a subtle way. Pre-paid services basically are used by over 90% of their users. According to Jio, it particularly had 441 million subscribers at the end of June, most of whom for all intents and purposes were on sort of prepaid plans in a big way. Therefore all intents and purposes are no earnings numbers yet available for Airtel and Vi, which basically is fairly significant.
Vodafone & Airtel Performance in Market
Despite both telco companies stressing this need to raise tariffs and average revenue per user (ARPU) to improve sector health, analysts found both reluctant to make their first move to increase ARPUs due to the aggressive expansion plans of market leader Reliance Jio.
Vodafone Idea, which faces more than Rs 22,000 crore in dues between December 2021 and April 2022, needs immediate tariff increases to improve its cash generation, analysts said.
BSE closed at Rs 567.90 for Airtel and at Rs 8.37 for Vi, a gain of 5.08% and 0.48%, respectively.
Conclusion
Analysts for all intents and purposes say Jio has no reason not to increase its particularly prepaid smartphone rates as it and Airtel definitely are for all intents and purposes likely to essentially continue increasing market share even after tariff increases as the incremental cash flows from Vi will literally be used to literally repay regulatory dues rather than actually invest in new projects, very contrary to popular belief.
The analysts assume a low risk of churn as the entry-level feature phone price of Airtel is mostly similar to Jio’s entry-level feature phone price. To transition to Jio’s network, customers need to purchase a new 4G handset since Jio does not have a 2G network, making churn less likely since subscribers need to purchase new handsets.
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