Airtel, Voda Idea Wean Off Double SIM Users By Upping Least Recharge Tariff

Incumbent telecom (telco) operators are targeting that 50 per cent of double subscriber identity module (SIM) users in the country will move out of their networks as a result of the steep increase in the minimum recharge tariff to Rs 35 a month by Airtel and Vodafone Idea.

Some 350 million subscribers are currently on double SIMs — that’s half the total subscriber base of 750 million. Owing to the number of double SIM users, the total number of mobile connections in the country stands at 1.1 billion. But if the telcos have their way, the number of connections will again go down to below 1 billion, to around 925 million.

The new strategy, said a senior Airtel executive, is to concentrate on 40 per cent of the subscribers at the top who constitute 80 per cent of the revenues. This is because the focus of the operators is now on revenue share rather than subscriber share.

The double SIM subscribers, who use their number as a secondary connection, provide only minimal revenue, use the phone mainly for incoming calls which choke the network (leading to call drops), and adversely impact the overall average revenue per user (ARPU).

Airtel, for instance, has over 100 million customers who only recharge their number for Rs 10 every month. They represent about 28 per cent of Bharti’s subscriber base of 346 million.

Airtel has an ARPU of Rs 100 and that of Vodafone Idea is Rs 88. Compare this with their key rival Reliance Jio’s ARPU of Rs 132. The increase in the minimum recharge tariff will help incumbents in bridging the ARPU gap as their minimum recharge tariff is already much higher at Rs 49 per month.

A senior executive of a leading telco pointed out that the loss in subscriber base will not have any financial impact. “Even if we lose revenues, half of the 350 million double SIM users as projected, we will make more revenues as the remaining 175 million will give us three and a half times more every month. So it will generate incremental revenues.”

The new plan by Airtel and Vodafone Idea to concentrate on revenue share is in clear contrast to their earlier emphasis on increasing their subscriber market share. One reason for the latter, before the spectrum auction, was the linkage of the number of subscribers to additional spectrum allotment. Later on, it was all about increasing penetration in an emerging market. But with overall penetration currently standing at over 89 per cent, the focus lately was on revenues and improving ARPUs which were getting hammered with the entry of Jio.

The incumbents are targeting two categories of double SIM users. Of the total of 350 million double SIM subscribers, 250 million of them recharge their number every month with Rs 10 and use it as a secondary number. The aim is to move them to a single SIM phone which will consolidate their ARPUs to one operator. With a higher tariff, the hope is that the subscriber will have to give up one of the SIM connections. – Business Standard