Pricing gap between postpaid and prepaid telecom services narrows: Motilal Oswal  

Postpaid ARPU stood at ₹192 per month against ₹181 per month ARPU for prepaid subscribers
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MUSTAFAH KK

Pricing gap between postpaid and prepaid services has shrunk significantly in recent years with further potential of increasing premium for postpaid, said Motilal Oswal Financial Services in a report on the telecom sector. While some experts said postpaid may contribute more significantly in the coming years, postpaid subscribers are unlikely to exceed prepaid subscribers.

Referring to the Telecom Regulatory Authority of India’s (TRAI) data on machine-to-machine (M2M) and overall postpaid subscribers, the brokerage firm said that consumer postpaid (retail + corporate) account for around 3.3 per cent of overall subscribers while their revenue share is likely higher at around 8 per cent.

Narrowing ARPU

Postpaid ARPU stood at ₹192 per month versus ₹181 per month ARPU for prepaid subscribers. While stating that TRAI’s postpaid ARPU reporting has been impacted by the rising share of M2M subscribers in the postpaid subscriber category, the firm still argued that the gap between the two kinds of services has narrowed since before the tariff hike. It noted that postpaid ARPU grew 5 per cent between June and December 2024 whereas prepaid ARPU grew 17 per cent.

“The relatively lower uptick in industry’s postpaid ARPU from the Jul’24 tariff hike (10-17 per cent on entry-level postpaid plans) is likely driven by the delays in effective implementation of the tariff hike for postpaid subs, and consumer postpaid subscriber ARPU has further room to grow,” said Motilal Oswal in its report, adding that telcos also prefer to increase their postpaid base.

The report also argued that postpaid subscriber base is stickier with significantly lower churn, can pay a premium than prepaid subscribers and so is likely to deliver better margins for telcos.

However, Sumeysh Srivastava, Associate Director-Public Policy at The Quantum Hub, said the number of postpaid users is unlikely to catch up to prepaid users any time soon, given India’s price-consciousness and the different approaches of telcos. While usage of more data will push more folks towards postpaid eventually, Srivastava said the subscriber numbers might take their “own sweet time to catch up” although revenue numbers may climb up.

“While data suggestmore people opt for postpaid as their income rises, that might not be a big factor here right away. Until we see really compelling everyday uses for super-fast 5G, the demand for those kinds of uninterrupted, low-latency connections that postpaid offers might not explode,” he said.

Meanwhile, Mahesh Uppal, Director of Com First (India), disagreed with the idea that postpaid may overtake prepaid in terms of revenue, as prepaid will be a larger part of the industry user base.

Currently, Bharti Airtel accounts for the most consumer postpaid base at 66 per cent, followed by Vodafone Idea (Vi) at 25 per cent. The firm estimated Reliance Jio’s share in consumer postpaid subscribers to be below 10 per cent.

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Published on May 12, 2025