After Bharti Airtel and Vodafone Idea silently introduced minimum recharge plans for their subscribers starting at Rs 35 with the intention of boosting their average revenue per user (ARPU), the subscribers were not happy. Many users complained that they were being barred from making calls and even receiving calls despite maintaining sufficient balance. Trai had also received multiple complains about this phenomenon, and it was only a matter of days that the regulator intervened in the matter. A new report has surfaced which tells us that this is precisely what has happened. Trai has sent out letters to both the private telcos who introduced the minimum recharges – Bharti Airtel and Vodafone Idea, thus keeping them again in the crosshair of industry watchdog.
Minimum Recharges as a Means to Boost ARPU
As per a report by mint, Trai approached the two telcos and directed them to inform their subscribers transparently about when their validity will be terminated followed by detailed information as to how they can opt for available plans and minimum recharges using their existing prepaid account balance. Further, the officials from Trai, on Monday, met with the two operators to discuss the future action plan.
Trai, in its letter clearly remarked that until subscribers aren't well informed, “Till such time operators should not discontinue services of such customers who have balance in prepaid accounts equal to minimum recharge amount.”
Airtel chief executive, Gopal Vittal, in a post-earnings investor meet had remarked that the introduction of minimum recharges would weed out the marginally paying customers, help in general and administrative expenses and would also allow the telco to focus better on premium customers who are ready to pay more for better services. On the same lines, he added that this move would boost ARPU for the company.
Vodafone Idea Follows on Airtel's Footsteps
Following suit, Vodafone Idea has also done the same and introduced minimum recharge packs starting at Rs 35, Rs 65 and Rs 95. These recharge packs will encourage the customers to go for higher value recharge. Further, the telco has remarked that it would simplify its tariff portfolio, reduce the number of available plans, cut customer complaints and reduce costs. Vodafone Idea also said that it would add recharge plans of Rs 145 and Rs 245 in its portfolio for the more extended validity period.
In an investor presentation held on November 21st, Vodafone Idea said that this move would result in a significant reduction of the incoming-only and non-paying customer base. Credit Suisse remarked on Vodafone Idea’s latest move saying, “While this could theoretically help ARPUs, we suspect revenue growth could still stay elusive in the current market-share flux.”