India's Largest Telecom Operator Bharti Airtel has announced plans that allow free voice calls from fixed-line phones. The company is offering unlimited local calls for Rs49/ month and unlimited local and STD calls for Rs99/ month subject to fair-usage policy (which caps the billing at Rs5,000). These plans can be used only by its broadband customers (with fixed-line connections) within India. Bharti has ~1.5m fixed broadband customers (vs >220m wireless customers) in India with ARPU of >Rs1,000 (vs ~Rs200 for wireless subs).
Given that interconnect charges on fixed-line connections have been brought down to zero (vs 20 paise earlier), and fixed-line infrastructure is under-utilised, bundling of broadband with fixed-line services will help Bharti provide more value to its high-end broadband customers without incurring any additional cost.
Notably, BSNL (which is the market leader in the fixed-line and fixed broadband business) also introduced a plan recently with free local and STD calls between 9pm to 7am during the day. Given that fixed-line net additions have been declining steadily and now account for just 2.7% of total telecom subscriber base in India, operators are looking for new ways to better utilize this asset. We believe Bharti's strategy of bundling fixed-line with broadband is a better strategy than BSNL's, as it will help provide a boost to the broadband business.
