Airtel Mobile is increasing voice tariffs for post-paid customers under one of its per-minute billing plans, Advantage 199, with effect from 8 Sep. This is in-line with our thesis of expected ARPM increases going forward.
Adhering to TRAI guidelines, Bharti Airtel has informed its customers that it will raise tariffs on the Advantage-199 plan. Under this plan, per-minute on-net local and STD rates will be raised to 60 paise from the current 50 paise. Rates for calls to landlines will rise to 90 paise from the current 60 paise. Post-paid subscribers account for ~4% of total subs for incumbents.
Due to higher operating and financial leverage, profitability is highly sensitive to any potential tariff hikes. Our scenario analysis suggests that an increase of 15% and 25% in ARPMs by FY15. ARPM growth would be one of the key catalysts going forward, in our view. We expect incumbents Idea and Bharti (our preferred picks, in that order) to benefit from this.