Voda Idea Turns To Cheap Recharges For Regaining 14 Million Lost Subscribers

Vodafone Idea is renewing its focus on low-end recharges like Rs 20 and Rs 49 in a bid to regain 14 million subscribers the merged telco has shed recently. However, the continued spend on premium customers through content partnerships may strain the company on both ends of the average revenue per user (ARPU) scale.

According to media reports, Vodafone Idea is seeking to introduce a recharge plan of Rs 20, cheaper than its existing Rs 35 plan. The strategy is to regain customers it lost to the SIM consolidation in the past three quarters.

The telco has lost revenue share in most circles where the merger of the two mobile networks has been completed, according to a report by JM Financial.

During the first quarter of the current financial year, Vodafone Idea saw quarter-on-quarter (QoQ) revenue market share erosion in all circles, except Himachal Pradesh.

“The current move, if the operator goes ahead with it, will be a measure to regain a large part of its rural base that it had lost since it started the SIM consolidation drive through minimum recharge plans last year,” said a telecom analyst, who did not wish to be quoted.

Vodafone Idea is still seeking to tap the prepaid low ARPU customer base with its recent offers with assured freebies such as unlimited calls, cashback, extra data, and caller tune on every recharge for all prepaid users under its new limited offering.

Roughly 60 per cent of the net dip in subscriber base of Vodafone Idea between October 2018 and June 2019 has been due to the rural exodus, which was the strength of erstwhile Idea Cellular.

The highest revenue market share (RMS) loss for Vodafone Idea was observed in the metro and A circles, specifically Delhi, Maharashtra, Tamil Nadu, Andhra Pradesh, and Mumbai. In the 10 circles where the two mobile networks have been integrated (end-4Q), Vodafone Idea lost RMS in all but one circle; in the remaining 12 circles, its QoQ RMS loss was generally higher.

“Finally, Vodafone Idea’s RMS (based on GR) continues to be over 50 per cent

in Kerala circles, but it may drop over the coming quarters,” noted Sanjay Chawla, analyst JM Financial.

Last week, Vodafone Idea categorically denied and dismissed the speculation that the company might exit the six telecom circles where it has seen a dip in its revenue.

A recent Bank of America Merril Lynch (BofA-ML) report said it believed Vodafone Idea would exit the six circles in C-Circle where it has been continuously losing revenue market share with share below 20 percent. The report has identified Himachal Pradesh, Bihar, Odisha, Jammu and Kashmir, North East, and Assam from where VIL may exit.

Meanwhile, the telco has forged a number of partnerships with content providers hoping to attract higher spending premium consumers. However, analysts are sceptical about the execution of this strategy as the operator is yet to show subscriber traction and sustainable revenue growth on this front unlike the rival operators.―Business Standard