Airtel Mobile myPlan aimed at Converting Pre-Paid base to Post-Paid

Tata DoCoMo disrupted the Indian Mobile Services market with Per Second billing in 2009 which led to the subsequent Tariff War over the next 2 years. This time around, India’s largest Wireless Carrier, Airtel is trying something on the Billing front where it aims to convert Pre-Paid subscribers to Post-Paid. Airtel has just 4.4% Post-Paid subscribers at the end of Jun-13 contributing around 18% of its mobile revenues.

Airtel has unveiled a comprehensive revamp of its postpaid mobile pricing structure under the myPlan offer. For a fixed monthly rental (starting Rs199), subscribers can now build their own consumption basket by selecting combinations of packs with following benefits: (1) Minutes [Local, NLD, ILD, National Roaming]; (2) SMS [Local and NLD]; and (3) Data [2G, 3G]. While this move may dilute postpaid VRPM at the margin, improved conversion of prepaid subs into postpaid, should lead to better volume growth, as well as lower churn rate in our view. Further, a move towards ‘tiered-bundles’ from ‘volume-based’ pricing should reduce LT risk to ARPUs from OTT cannibalization.


Airtel MyPlan Key Features

• Only Individual Connections can go for My Plan. It is not available for corporate connections.
• Changes to My Plan can be made once a month
• It is not mandatory to choose myPacks from each segment (e.g. one may go only for the voice packs)
• Customer needs to choose all the myPacks offered as part of rental plan he/she is choosing
• For Voice and SMS, if the changes are made within a month/bill cycle, charges on pro-rata basis will be applied
• In case a customer wants 3G pack instead of 2G pack, the 2G pack needs to removed first and then only 3G pack can be activated
• For data, full benefits will be offered and no pro-rata charge will be there, even if change is made within a month/bill cycle

Analysis of myPlan Offer
The Average voice call rate will be around 50-52p; It offers Prepaid-like flexibility to choose consumption mix, while having control over monthly expenditure and Daily intimation of actual consumption till-date in the latest billing cycle, in terms of minutes/texts/MBs.

Impact of myPlan on Airtel
Postpaid subs that are primarily voice-users may be able to reduce their bills by going for lower rental plan.
We expect impact to be fairly limited, as myPlan is not available for corporate subscribers that form majority of the postpaid user base.

With growing number of il-legal Pre-Paid Mobile Balance Deduction complaints on Airtel, consumers would be better off convertingt heir connections to Post-Paid.