Brokerages are largely bullish on Bharti Airtel's new postpaid plans with CLSA maintaining an 'outperform' rating on the stock and a target price of Rs 2,310. The target implies a potential upside of 26%.
Bharti Airtel has increased tariffs across its postpaid portfolio by Rs 50 per month, effective October 8, as the telecom major seeks to strengthen its premium customer base and lift average revenue per user (ARPU). The revised plans come with enhanced benefits, including a complimentary international roaming pack for eligible customers.
Under the new offering, each postpaid SIM will be entitled to one free international roaming trip every year. The five-day roaming pack includes 5GB of data, 60 minutes of voice calls, 25 outgoing SMS and free incoming SMS. Customers on family postpaid plans will also be able to avail the benefit separately for every SIM linked to the account.
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Airtel is also bundling other premium features with its postpaid plans, including access to 5G Fast Lane technology, network-level protection against spam and fraudulent links, and entertainment benefits through the Airtel Postpaid Advantage Club.
The brokerage noted that Bharti Airtel currently has 30 million postpaid subscribers and Rs 50 increase would boost India mobile revenue by 2%, however, this will likely be partially offset by the roaming revenue loss as well as charges to be paid to the international operator for network usage.
Morgan Stanley, on the other hand, viewed the plans being reactive and not Average Revenue Per User (ARPU) accretive. The brokerage noted that these plans are slightly more competitive than its peers
Family postpaid plans emerge as the key beneficiary, according to MS, with international roaming benefits available on each SIM at nominal prices of Rs 10-25, improving their value proposition.
Morgan Stanley thinks that this move is intended to arrest churn, increase customer stickiness and attract/migrate postpaid and premium prepaid users to these plans buckets.
Nuvama Securities expects Bharti Airtel's revenue to grow, we expect 3.1% sequentially, with 3.1% quarter-on-quarter growth for the India business and 4.6% sequential growth (in Rs terms) for the Africa business.
"India mobile services business to edge up 4.0% QoQ on the back of stable growth in ARPU and subs addition. Consolidated EBITDA margin to contract 30bp QoQ to 57.2%," Nuvama underlined in its telco research note.
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