Vodafone and Idea Increase Incentives for Distributors, Reliance Jio and Bharti Airtel Receive the Blow

With the merger approaching its final stages, the Kumar Mangalam owned telco Idea Cellular, and Vodafone Plc held Vodafone India have drastically intensified their efforts in a quest to rake in as many subscribers as possible. The merger which was finalised last month has paved the way for the formation of the largest telecom operator in the country with the most prominent subscriber base and revenue market share. The blow from Idea and Vodafone has been delivered to the other large telcos like Reliance Jio and Bharti Airtel.

vodafone-idea-limited

Incentives to Retailers Increased

The distributors for all of the companies mentioned above have also caught a whiff of the increasing efforts from Idea and Vodafone’s side to amass more and more subscribers. Notably, Vodafone and Idea were giving out Rs 70-80 worth of incentives to each of its distributors. Now those numbers seem to be soaring high. As per a distributor based in Mumbai circle, “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.”

Making Up for Lost Subscribers

It is also worth noting that the merger of both the companies comes at a very crucial time when Idea Cellular was losing its share of the pie. Now with the merger already finalised Idea Cellular and Vodafone will release aggressively priced plans to attract more and more subscribers. Right now, combined, the newly formed entity, Vodafone Idea, boasts of 408 million users under its umbrella or 37% of total market share reports Economictimes.

However, there is still a small hurdle in the form of conditions for the merger which require the combined entity to shed subscribers in six circles — Gujarat, Haryana, Kerala, Madhya Pradesh, Maharashtra and UP (West) — to adhere to the 50% subscriber cap rule. Also, as per a report published by brokerage firm Jefferies, out of the 22 circles in which Idea Cellular operates, it lost subscribers in 21 circles while suffering a significant dent in Maharashtra, one of its key circles. Idea and Vodafone together have lost subscribers in 14 circles.

One of the senior executives in a competitor firm said “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.”

Experts’ Take on the New Incentive Strategy

It is being said that the former market leader Bharti Airtel which has 340 million subscribers under it, will possibly match the levels of Vodafone and Idea concerning incentives. Right now it offers Rs 70-100 worth of incentives for its retailers. However, analysts are of the opinion that this is a tactic which has worked even when the market had 6-7 major players. Now in a consolidated market, merely increasing the incentives for the consumers will fall short of its goal.

Bharat Bhargava, partner and telecom advisory services for ET said in a statement, “The operators need to incentivise the retailers not just to get new subscribers but also to get the customer who will use the telco’s SIM as his primary one. The retailer needs to push your product, not for the second SIM, the battle is to become the main one.”

Reliance Jio’s retailers have also been promised of impressive money and have been told that by selling a JioPhone 2 they will earn Rs 140 while on a Reliance Jio sim they will be making Rs 60. The Mukesh Ambani led telco is expected to increase incentives as much as by 100% in the coming weeks in a quest to chase more subscribers.

A Reliance Jio distributor in New Delhi remarked: “In the current competitive market, Jio may increase its incentives for retailers by 100% for those who just sell a SIM card to a new subscriber.”

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25 Comments on "Vodafone and Idea Increase Incentives for Distributors, Reliance Jio and Bharti Airtel Receive the Blow"

 

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Vineet
August 17, 2018 2:22 pm 2:22 PM

Off Topic Airtel volte is active across India except HP and J&K.
Source – airtel website.

Prithvi
August 16, 2018 10:24 pm 10:24 PM

As a precaution, the users must first verify if the service provider they select works well at the places they tend to be in. As far as this strategy is concerned, its great but don’t prolong this incentive for too long.

DGupta
August 16, 2018 7:40 pm 7:40 PM
Vodafone+IDEA don’t have the money to actually improve the network. The parent companies are also not interested in funding them with new equity. So, they are resorting to these tactics in the market. Retailers will try to push Vodafone, but it will only increase churn – they will acquire more customers, and more dissatisfied customers will switch to other providers. Even in a place like Mumbai, where Vodafone used to be good, their network now routinely refuses to connect calls! The data speeds are also slower than everyone else because the network has poor 4G capacity. Vodafone either needs to… Read more »
Chetan Malhotra
August 17, 2018 10:30 am 10:30 AM
+1 , I have been telling this from the time both companies announced merger last yr.. this merger is for convenience and not to outsmart other telcos or growth …. Vodafone wants to save it’s investment before moving out of India. Idea wanted scale of assets and to knock off no. 2 player , hence this merger… All these announcement by Vodafone stating ” we will remain invested in India” is all crap… What ever few thousand of crore will be spent will go into amalgamation activity and not a single rupee will go towards capacity augmentation.. I will be… Read more »
Kaushik IMA
August 17, 2018 12:33 pm 12:33 PM

Do you think an IIT trained person like me doesn’t know PR spin?

I am only saying investment vs no investment. There is a big difference between RCOM in its last days and Idea Cellular today.

You also know that, so stop misleading the public here with nonsense.

AU(Airtel User)
August 17, 2018 1:06 am 1:06 AM

+1

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