The Indian telecom sector’s post-paid segment reveals that tariff aggression is no longer the best growth strategy for operators, according to a report by CLSA, a capital markets investment group. This trend comes at a time when all eyes turn to the post-paid segment to enable Indian telcos to break even on the expensive 5G Capex cycle underway.

As market watchers await the pricing strategy for telcos for 5G service, paying special attention to RelianceJio, which can continue its modus operandi of pricing aggressively lower than its competitors- CLSA’s study of Jio’s pricing strategy in the 4G post-paid segment notes that it has not garnered much success. As per the report, Reliance failed to churn subscribers for the past two years in the post-paid segment, even as Bharti Airteland Vodafone Idea raised their post paid tariffs. 

This comes even as Jio’s tariffs are at a 100 per cent premium (nearly half) of those paid by subscribers on Vodafone Idea and Bharti Airtel. According to the retail post-paid comparison provided by CLSA- an average post-paid plan by Jio as of ₹199 versus Bharti Airtel and Vodafone Idea, whose plans retail at ₹399 per month. For context, Reliance Jio enjoys the poorest post-paid subscriber base, which analysts estimate to be anywhere between 1-5 million.

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On the other hand, 18 million of Bharti Airtel’s 327 million subscriber base is on a post-paid subscriber base. Vodafone Idea continues to enjoy the highest post-paid subscriber base of 20 million out of of its 242 million subs in the post-paid subscriber segment.

The importance of the post-paid segment is revealed by the fact that it can contribute to 15-20 per cent of an operator’s revenue, even while commanding a 5 per cent presence in a telco’s subscriber base. With disparate incomes in India, this market is a hard one to crack and grow for operators.

According to the CLSA report, Bharti and Vodafone Idea have struggled to maintain their ARPUs after increasing the price of their post-paid plans, as consumers downgraded to lower-paid plans. However, the telcos were able to hold on to their subscriber base. 

This data is especially revealing as telcos try to win the 5G war, where use cases for the lower tier subscribers do not really exist. In an endeavor to fight with Bharti Airtel on network quality, Reliance Jio purchased the much coveted 700MHz band for ₹40,000 crore. Analysts predict that Jio is targeting garnering post-paid subscribers from competitors.