The move to weed out low-revenue users cost the telco 14 million subscribers in Q1 and analysts predict further erosion, as they feel the strategy may have backfired.
The minimum recharge plans kicked in around November last year. Since the December quarter of 2018-19, Vodafone Idea lost 67.2 million subscribers, and, in the bargain, gained Rs 20 in its average revenue per user (ARPU). With this new limited offering, the focus has shifted back to rapidly gaining prepaid customers through the new offer. The company is looking at a series of new branding exercises in addition to these offers.
Meanwhile, Reliance Jio intends to continue the aggressive subscriber addition process although the management is keen on upgrading users to long-term plans which give them higher margins.
The company has been pushing digital recharges for higher margins on the network to the extent that it costs the firm some ARPU this quarter.
Airtel is launching premium bundled services, as part of the existing Airtel Thanks programme for customers willing to pay Rs 999 and more to build on the ARPU momentum.
This will give subscribers benefits like lounge access, more content offerings, discounts on consumer brands, international roaming, health insurance and bundled apps as well as streaming services.
“Given the significant premiums that postpaid has over prepaid, we have re-architected pricing to fit in line with existing customers, which has led to no further ARPU downgrades,” said the Airtel management after the June quarter results.
The telco is prepared to let go low-paying customers and derive more revenue from existing ones.