Indian Telcos Slash Freebies And Talktime To Increase Margins

By : Subscribe to ambrosia's | November 22, 2012 4:11 PM IST

Top mobile operators in India unveiled a new set of initiatives for prepaid subscribers in a bid to increase sales margin and revenues, The Economic Times reported.  

Faced with low margins in the past three years, Bharti Airtel, Idea Cellular, Vodafone India, Tata Teleservices, and Aircel are seeking to improve sales figure and growth by modifying prepaid plans such as cutting down on freebies and talktime.

For customers in Delhi, Bharti Airtel reduced the validity of a discount voucher from 90 days to 60 days. Customers using the ₹28 worth voucher are allowed to make STD calls at ₹012 per second.

In Maharashtra, an Idea Cellular discount voucher, allowing customers to place calls at 1.2 paise per second, now costs ₹97 from its previous price of ₹72. Vodafone customers in Kolkata are permitted 10 minutes less of free talktime at 55 minutes. Tata Teleservices downgraded it 'STD seconds pack', offering subscribers 33,000 free seconds from 36,000 seconds. These changes were made in the two to three weeks, the report said.

The new round of modifications is expected to have an impact on India's 850 million plus prepaid subscribers, who are often plagued with worries of possible increase in tariffs. Presently, only ₹105 to ₹180 of average revenue is generated per customer on a monthly basis, Mobile Indian noted.

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"There is definitely room to reduce low value and free minutes in all markets across the country, given the state of telecom industry. However, Airtel will continue to be marked to market and provide value to its customers," an Airtel spokesperson told Economic Times.

Telecom companies are currently involved in a dispute over SMS termination fee, which is paid by an operator whose calls and SMS are sourced to another operator, where the communication ends, PTI reported.

There is also the issue of rising spectrum and infrastructure costs, forcing Mobile carriers to push for price modifications.

According to The Times of India, analysts believe that the changes could yield positive results for operators in the country.

"For subscribers using these discount plans, these changes could have the impact of increasing the RPMs by 8-13% (impact on overall subscriber base would be lower)," said Credit Suisse research analyst Sunil Tirumalai.

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