Airtel, Vodafone Idea prepaid connections could stop for about 60 million users

Its been a tough competition between the telcos in present data packages providing at a low price but it sis severely hurting to the earnings of telecom operators, and to boost their revenues, The telcos introduced new monthly recharge plan at just Rs 35. And this to be cautious for mobile users this move may weed out .your prepaid connections.Yes, you read right.

According to a report on the Financial Express, Vodafone Idea has roughly 150 million subscribers who recharge for less than Rs 35 a month, whereas Airtel has about 100 million users in the same bracket that recharge for less than Rs 35. So, a combined total of 250 million are mostly dual-SIM users, on the 2G network, and they do a lower monthly recharge, only keeping the connection for incoming calls.

So for Airtel, from 330 million users, 100 million are generating monthly revenues not more than Rs 10. This was too worst where earnings from these users are not more than Rs 100 crore. In order to know who can manage the mobile connection revenue the company introducing the minimum recharge of Rs 35, the company hopes to generate a revenue of Rs 350 crore. Even if we consider that half of the subscribers are lost in the process, even with 50 million subscribers, the revenues will still be Rs 175 crore.

Even the market leader Vodafone Idea also introducing a similar plan for low-value users to set a floor on pricing. “It was a substantial number that was using it either only for incoming or had got ARPUs below that of the average or that of unlimited customers. The ARPU of non-unlimited is about a fourth of the ARPU of the customers who take the unlimited plan. Therefore, everybody who goes up the chain is an upside, even within the non-unlimited, because now he or she is paying a rupee in the Rs 35 a month package,” Vodafone Idea CEO Balesh Sharma said told FE.

In the third quarter, Airtel has reported an ARPU of Rs 101, whereas Vodafone Idea has an ARPU of Rs 88. Reliance Jio, on the other hand, has reported an ARPU of Rs 131, and that is because the lowest plan from the telco is priced at Rs 49 a month. The move to have a minimum recharge of Rs 35 a month should further see a boost in ARPUs for both, Airtel and Vodafone Idea. The move could see up to 60 million subscribers give up their second SIM for their primary SIM card in the coming six months.

Besides boosting their revenue, there is another cause to introduce this motion. Telcos want to shut down 2G networks and move to expand 4G coverage to compete with Reliance Jio. By discarding low paying 2G users, there is an opportunity for telcos to move subscribers to 4G, at least the feature phone users. Introducing a 4G feature phone, just like Jio did with the Jio Phone could help the telecom companies further.