Thugs of Telecom – Airtel, Vodafone-Idea Will Sacrifice 25 Crore Users To Increase Profits
The new 'masterstroke' by Airtel, Vodafone is to squeeze the user, and extract more ARPU.
Profits are the purpose of a business. We agree.
But what if the business’s sole purpose becomes profit? Then the needs of their customers are sacrificed, and thus, the customers are sacrificed.
In a cunning business move, Airtel, along with Vodafone-Idea has decided to sacrifice their 20 crore or 200 million users, and the objective is to increase profits.
Find out their latest ‘masterstroke’ to book more profits, at the expense of their users.
Dual SIM Owners Targeted By Airtel, Vodafone-Idea
To first understand this whole business of sacrificing customers, let’s first understand how a typical telecom user in India is using his/her mobile right now.
After Jio introduced cheaper plans, millions of existing users took another SIM, and due to the easy availability of dual-SIM mobiles, this happened smoothly.
In most the cases, existing Airtel or Vodafone or Idea user took a new Jio number, and continued to use both the SIMs – primary one for data and calls, and secondary one as backup and/or because it was an old mobile number, they didn’t want to change that.
Now, as per latest numbers, such dual SIM users, who are using Airtel as a secondary number are 100 million and for Vodafone, it is 150 million.
These users typically spend Rs 10 per month just to keep their SIM active, and even if outgoing calls don’t happen, atleast they can get incoming calls.
And this is where the ‘masterstroke’ arises.
Airtel, Vodafone Will Sacrifice 200 Million Users
Airtel’s 100 million, and Vodafone-Idea’s 150 million becomes total of 250 million or 25 crore users. These are low-paying customers, with low ARPU of just Rs 10 per month or Rs 120 per year.
Now, both Airtel and Vodafone have launched their minimum plan of Rs 35, which ‘has’ to be recharged, for keeping the number alive, and to get incoming calls.
Hence, the plan is to force these 250 million users to spend atleast Rs 35 per month.
This way, Airtel can ensure total revenues of Rs 2100 crore from these low-paying customers, per year, and Vodafone-Idea can ensure revenues of Rs 3144 crore per year.
That’s almost a jump of 60-75% in revenues.
What If Customers Refuse To Recharge?
Sacrifice. Airtel and Vodafone, both have understood that there is no loss in this strategy. There can be three options now:
- The low paying customer will have to recharge the minimum pack, which is Rs 35 right now. Profit for the telcos.
- The low paying customer will move to the unlimited pack, thus pay atleast Rs 150 per month. More profit for the telcos.
- The user will ditch Airtel and Vodafone. This would be a loss of just Rs 10 per month revenue, which can be balanced by the increased profits.
Bharti Airtel CEO and managing director (India & South Asia) Gopal Vittal said, “You could expect some shrinkage of our low-end customer base as we move to minimum Arpu plans, but dramatic growth of pre-paid on 4G and of course the post-paid segment. If you look forward a couple of years, we should see at the lower end 100 million customers giving us low-double digit Arpus compressed further by 30% to 40% and an Arpu upside there. And on the middle end almost all customers will start sort of moving to 4G.”
What Does This Mean?
This means that the telecom firms are now becoming aggressive, and more focussed towards ensuring profits. This means that the poor telecom user, who cannot afford a minimum recharge per month will be without a SIM.
This means that the business of telecom has now become even more complex.
All eyes set on Jio now, as a new cheaper plan with longer validity can turn the tables.
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