Why postpaid struggles against prepaid in India

India’s telecom sector has been primarily characterized by prepaid connections, with postpaid services finding it difficult to make a significant impact. Although postpaid options used to be seen as a status symbol, the swift advancement of prepaid plans has greatly reduced their attractiveness. Declining Market Share of Postpaid Postpaid connections in India represent less than 10% of the overall mobile subscriber base. This decline can be attributed to several factors:

Affordable Prepaid Plans: The competitive pricing and generous data limits of prepaid plans make them more appealing.

Flexibility and Control: Many users favor prepaid options for better budget management, steering clear of unexpected high bills. 

Ease of Switching: Thanks to mobile number portability (MNP), customers can easily change operators, which makes long-term postpaid contracts less desirable.

In the past, having a postpaid service in India was synonymous with a premium experience, where customers enjoyed special attention, privileges, and loyalty rewards. The longer you stayed with an operator, the more valuable you became, reflected in higher credit limits and better service. Nowadays, however, postpaid users find that they receive minimal added value in terms of customer service or overall experience. In many cases, there’s hardly any difference between prepaid and postpaid plans. With prepaid services now offering unlimited benefits, the line separating the two has nearly vanished. The quality of service in the postpaid segment has steadily declined across the board.

No Notable Benefit

Postpaid offers certain benefits, such as "data rollover" and "use now, pay later," but it doesn't significantly improve the customer experience for consumers. For postpaid users, there is currently no discernible difference in experience aside from bulk data and data rollover. 

In India, the two main postpaid mobile providers are Bharti Airtel and Vodafone Idea (Vi). Compared to Vi and Airtel, Jio probably doesn't have half as many postpaid mobile customers. It is difficult to determine an accurate number because Jio does not disclose its postpaid customer numbers in the annual or quarterly report. Vi and Airtel had 24.5 million and 24.66 million postpaid mobile users, respectively, at the end of Q2 FY25. 

Role of pricing in telecom firms' inability to increase postpaid connection sales in India

In the telecom industry, prepaid packs are typically more affordable than postpaid options. The reasoning behind this is straightforward. When providing a service, would you prefer to receive payment upfront or after the service has been used? Telecom operators prefer advance payments for several reasons: 

• They secure your payment before you even start using the service. This money can be invested. While an amount of INR 150–200 might seem small, when over 100 million customers pay this in advance, it becomes a significant sum of liquid cash.
• They are protected against the risk of non-payment. With postpaid services, there’s always a chance that a customer might not pay their bill after using the service. This assurance is a major advantage for telecom companies.
• Activating a postpaid number requires more effort. It’s akin to issuing a credit card, where the company must conduct thorough customer verification, which incurs costs. This expense is eliminated with prepaid connections.
• Prepaid connections have usage limits. For instance, if you buy a 5 GB data pack, your data will stop working once you’ve used it all, requiring a recharge. In contrast, postpaid users can continue using data even after their 5 GB plan is exhausted, leading to higher costs. However, these users often complain about incorrect billing, and companies may end up writing off excess charges due to customer misunderstandings. Regardless of whose fault it is, the financial burden ultimately falls on the company, not the customer.

For these reasons, businesses price postpaid plans slightly higher than prepaid ones. This strategy keeps the mass market engaged with prepaid options, minimizing risk, and ensures that only those less concerned about spending choose postpaid services. 

While postpaid connections have seen a decline in India’s telecom market, there are several strategies that telecom companies can implement to spark renewed interest and increase adoption. The focus should be on providing attractive value propositions that set postpaid apart from prepaid and address consumer concerns.

1. Introducing Exclusive Benefits To enhance the appeal of postpaid, telecom operators should offer premium benefits that are not available in prepaid plans. This could include: Bundled OTT Subscriptions, providing access to Netflix, Amazon Prime, JioHotstar, or other streaming services at no additional cost. 

Priority Customer Support – Ensuring quicker resolution of issues and dedicated helplines for postpaid users.

Network Prioritisation – Offering faster speeds and reduced latency for postpaid customers, particularly in busy areas. 

2. Family & Corporate Plans Postpaid can be marketed as a budget-friendly option for families and businesses:

Family Plans – A single bill for multiple SIMs at a discounted rate, providing convenience and savings.

Corporate Packages – Tailored plans with bulk discounts, enhanced security features, and improved data-sharing options for businesses.

3. Device Bundling & Financing In more developed markets, postpaid thrives due to options for financing handsets. Indian telecom companies can consider:

EMI-Based Smartphone Plans – Allowing users to purchase high-end smartphones through manageable monthly payments linked to a postpaid plan.

Exclusive Discounts on Devices – Collaborating with manufacturers to provide device discounts for postpaid subscribers.

4. Better Cost Transparency & Control A significant barrier to postpaid adoption is the anxiety over unexpected bills.

Telecom providers can address this by: Offering customizable plans that allow users to set limits on data and calling expenses. Implementing real-time usage tracking through mobile apps to notify users before they exceed their limits.

5. Loyalty Rewards & Cashback Offers Long-Term Customer Benefits – Launching loyalty programs where long-term postpaid users receive extra data, discounts, or cashback.