India’s telecom operators are confronted with an enormous task after the government decided to reduce service tax by 2% which will now help operate to increase talktime on Prepaid Recharge. Executives with telecom companies estimate that there may be over 500 million prepaid recharge vouchers in the market that will have to be reprogrammed on account of this tax reduction.Each prepaid voucher comes with a fixed value of talktime, calculated after deducting various levies.
About 93% of India’s 370 million mobile customers are on the prepaid Platform.The reduction in service tax implies that the cost of these prepaid vouchers will reduce marginally.The other option is to increase the talktime on these vouchers.For instance, a Rs 350 recharge will now come with about Rs 7-9 worth of additional talktime. However, companies say that it will be next to impossible to reprogram all existing vouchers in the market.
According to telco executives,prepaid users buy two recharge vouchers a month on an average.But about 50% of prepaid users opt for electronic recharges.Taking into account e-recharges,it still works out to about 340 million recharges through physical Voucher every month. Distributors, company-owned outlets and retailers usually keep stock for a 30-45 day period which translates to 500-600 million physical vouchers.
“Customers opting for an electronic recharge will get the benefits of the service tax reduction immediately. But on physical vouchers, we are yet to take a call on how the benefits can be passed on, especially with regards to the prepaid cards that are already been dispatched to distributors and retailers,” explained the spokesman of a leading GSM operator. Similarly, the Vodafone Essar spokesman said the telco was exploring different options, including increasing talktime on all existing vouchers that had already been distributed for sales.
An executive with a CDMA operator said that since activation of prepaid vouchers happens at the backend, all operators were already making changes to their IT applications to provide additional talktime. For instance, the Reliance Communications (RCOM) spokesman said that since the telco operated an Intelligent Network (IN) billing platform, it would be able to re-configure the talktime on all prepaid cards within a short time frame. “We have already kickstarted the process. Customers who buy these vouchers from Thursday (February 26) will get additional talktime,” he added.