In its bid to increase the Average Revenue Per User (ARPU), a key industry parameter, Bharti Airtel removed the lifetime recharge packs from its portfolio and also did away with the talk time recharges as well. In place of this, Bharti Airtel introduced minimum recharge packs which the subscribers will have to opt in if they want to continue with the telecom provider’s services. However, this has come at the cost of Airtel losing its subscribers. According to a new Business Line report, Bharti Airtel might be on the path of losing 50-70 million subscribers in the coming months due to this new step. But there’s a catch. Airtel was in expectation of this result, and in some ways, was even hoping for it because it would help the telco in weeding out the non-paying customers.
4G Smartphones Another Way of Acquiring Subscribers for Airtel
Airtel was aware that a large number of SIMs were not being used by the customers who were not generating any revenue for the telecom operator. This new move, instead, will ensure that only high paying customers who are ready to pay for Airtel’s services will stay on-board and will continue to make recharges. An Airtel executive said about this, “I think we may shed a few customers — 50 million to 70 million — as some of them may not exist at all or these could be second SIMs. That’s ok… why carry the burden?”
Now there is a new challenge for Airtel; the telecom operator will need to acquire more subscribers who are ready to pay and not just come for the freebies that the company offers. Recently, Airtel has explored another possibility of acquiring more subscribers by getting them to use 4G smartphones. The Airtel executive said, “There is also scope for increasing the ARPU by giving better and more services, more content with partnerships and so on.”
It was back in October when Airtel decided to put a hold on the lifetime free incoming calls plan for prepaid customers because the customers were also not paying for outgoing services. However, the implementation was met with hostility from the subscribers. Instead of some of its prepaid tariff plans, the telecom operator introduced minimum ARPU plans and asked the subscribers to recharge with a minimum of Rs 35 plan to keep the services running.
Trai Issues Directive Regarding Minimum Recharge Plans
The ARPU, which is a crucial industry parameter took a nose dive for the incumbents like Airtel, Idea and Vodafone after Reliance Jio entered the telecom market in September of 2016. This year, Airtel’s ARPU was pegged at Rs 100, while Vodafone Idea’s ARPU was Rs 88 while the ARPU of Reliance Jio was significantly higher at Rs 131.
After realising that the companies needed to improve their ARPU to deal with their cash deficit situation, telcos introduced the minimum recharge plans. However, amidst rising complaints from customers, the Telecom Regulatory Authority of India (Trai) issued a directive to the telecom operators mandating the companies to release a clear, informative message to the subscribers. However, as per the law, the telcos are entitled to discontinue a plan which is more than six months old.