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Last Updated : Nov 01, 2018 02:32 PM IST | Source: Moneycontrol.com

Airtel, Vodafone Idea roll out minimum recharge plans to boost ARPU: Report

This means that users who do not recharge their plans would see outgoing calls blocked in 30 days and incoming ones in 45 days

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Bharti Airtel and Vodafone Idea have rolled out minimum recharge plans for users to boost their average revenue per user (ARPU) and focus on profitable customers, The Economic Times reported.

The telecom companies have introduced a host of sub-Rs 100 prepaid packs such as Rs 35, Rs 65 and Rs 95, with a 28-day validity period.

This means that users who do not recharge their plans would see outgoing calls blocked in 30 days and incoming ones in 45 days.

The move is aimed at weeding out customers from their network who are not generating any revenue for them, the news daily reported.

Read — Committees set up to address telcos' concerns: Telecom Secretary

When Reliance Jio Infocomm entered the market in September 2016 with competitive prices, it pushed other telecom operators to drop rates, which in turn took a chunk out of their topline and profitability.

"Airtel and Vodafone Idea seem to be finally saying enough is enough by introducing minimum recharge plans across India to boost ARPU and don’t seem to mind losing some freeloaders who were anyways not generating any cash for them," Sanjiv Bhasin, Executive Vice President, Markets & Corporate Affairs, IIFL, was quoted as saying.

Read — Situation bad, whole industry is bleeding: Vodafone Idea officer

Bhasin also told the paper that both Airtel and Vodafone Idea appear to be "focusing on the middle and upper-tier customers who don't typically switch operators overnight like the base level value hunters."

Jio's entry also led to the consolidation of the domestic telecom industry into three large private players — Vodafone Idea, Bharti Airtel and Reliance Jio — making it an ideal market situation for pricing power to return over time, analysts told the paper.

Read — Tariffs can't be raised; affordable 5G devices in India by 2021: Jio

The move also indicates that tariffs may start going up in the upcoming quarters.

"Tariffs may start edging up by the third/fourth quarters of FY19 itself, culminating in pricing power making a gradual comeback," Rohan Dhamija, Partner and Head of India and Middle East at Analysys Mason, was quoted as saying.

Last week, Airtel's Chief Executive Officer Gopal Vittal had said the company expects prepaid ARPU to start improving by the third quarter of the current fiscal year on account of the minimum recharge plans.

He also said that this could lead to a reduction in the company's selling, general and administrative (SG&A) expenses.

Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
First Published on Nov 1, 2018 09:58 am
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