In a move to woo customers, Vodafone and Idea have reportedly more than doubled the incentives given to retailers for adding subscribers, according to an Economic Times report.
Earlier, retailers used to get Rs 70 to 80 per customer from these companies that are set to complete the merger by the end of this year.
“Vodafone and Idea’s retailers have been told that for every new customer, they will get Rs 180-250, depending on the recharge plan they manage to sell. Higher the recharge amount, more the incentive,” a Mumbai- based distributor told the daily.
Telecom companies use a chain of distributors, who get a share of the revenue, pass the product to retailers responsible for the sale of the product to the end consumer.
The companies together have a market share of 37 percent which amounts 408 million users but Idea has been losing subscribers recently. Idea has lost subscribers in 21 circles, according brokerage house Jefferies.
However, Idea and Vodafone have to reduce their subscriber share in six circles to comply with rule of mergers not being allowed to have more than 50 percent of the total subscribers.
“They (Idea and Vodafone) have lost some of their distributors who now want to join us and they will have to rationalise once the merged entity starts working. So increasing incentives will help them retain retailers in important circles,” a senior executive in another telecom company told ET.
Airtel may match the incentives given by Vodafone and Idea, in certain areas while retailers of Jio are also expecting a 100 percent rise in the incentive.
However, analysts are of the opinion that an increase in incentive wouldn’t be an adequate measure to compete in the telecom market.
Bharat Bhargava, partner, telecom advisory services for EY told the paper that the companies need to incentivize retailers to not just sell SIM cards but convince customers to them their primary card. – Money Control