Telcos Trim Users To Revive Average Revenue

The business revival strategies being seen in the stressed telecom sector are reducing the country’s mobile user base and widening the digital divide as total mobile subscribers declined by almost 2% in the month of March.

Telecom operators such as Bharti Airtel and the Vodafone Idea combine introduced a ‘minimum recharge’ regime recently to weed out low-paying users and thus increase their average revenue per user (ARPU). This has led to the two telcos trimming almost 4% off their user base.

Subscription data from the Telecom Regulatory Authority of India (TRAI) for March 2019, released on Tuesday, shows total the mobile user base reduced — for the first time in 12 months — to 116 crore in March from 118.3 crore in the previous month.

While Jio was the lone gainer, adding 94.9 lakh users in March, Vodafone Idea reported a decline of 1.4 crore, and Bharti Airtel’s subscriber base declined by 1.5 crore.

Industry trackers TOI spoke to said the move from balance-driven to a validity-driven plans was intended to help telcos improve their ARPUs. But the move comes at the cost of low-income users losing access to mobile services. The monthly decline rates of urban and rural mobile users in March was 0.9% and 2.9% respectively.

Analysts said low-ARPU consumers who cannot afford regular recharges and whose access to mobile services is of an ‘incoming-only’ nature contributed largely to the decline. The owners of multiple SIM cards, who gave up their inactive connections after the new regime, also contributed to this decline.

Faisal Kawoosa, founder of consulting firm techARC, is concerned that communication services are becoming a matter of affordability. “They (telco operators) want to engage with only those who have the propensity to spend a certain amount and also can add more to revenues as they launch more and more services like OTT content, smart homes and surveillance, to name a few,” he said. Operators can instead use data analytics to come up with user group-specific plans, he suggested.

Jigar Doshi, co-founder of the mobile plans comparison portal Komparify, said India has a substantial base that uses mobiles just for incoming, which the new tariff plans do not support. Under the new plan, prepaid users need to recharge with amounts ranging from Rs 23 to Rs 35 at regular intervals to keep connections alive (even for just incoming calls). “Failing to recharge would lead to terminated connections after a certain timeline,” Doshi said. Vodafone Idea’s ARPU for the March quarter grew by 16.3% quarter-on-quarter to Rs 104 on the back of strategic decisions, including the new recharge regime, according to a company statement issued last week. The telco reported migration of 5.3 crore ‘low-ARPU’ consumers in the quarter. Airtel did not comment on TOI’s queries on user decline.

Analysts said it remains to be seen whether a focus on ARPU growth at the cost of customer losses could work for the two telcos, even as rival Jio continues to ramp up user base by diluting its ARPU.―Times of India