Connections might soon be cut for those Vodafone-Idea and Airtel SIM subscribers who spend less than Rs 35 per month on recharge.
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Vodafone-Idea and Bharti Airtel have reportedly decided to switch off the connection of subscribers with low Average Realisation Per User (ARPU). This is said to be because such users generate ARPU of around Rs 10, which reportedly generates about Rs 100 crores in monthly revenue for Airtel. If this was raised to Rs 35, the overall monthly revenue will go up to Rs 175 crores, reports Financial Express. This means that around 250 million 2G connections might soon be switched off if their users don’t go for these higher priced plans. From these connections, Airtel is said to have about 100 million users that spend lower than Rs 35 per month, while around 150 million Vodafone Idea subscribers are said to fall under the same category. The telcos have reportedly scrapped their older plans that were below the ARPU and both, Vodafone Idea and Airtel, have released 5 and 7 plans starting at Rs 35 per month respectively and these packs are available pan India.
“We have about 330 million customers in wireless, but if you look at the pattern of consumption across the base you will find that there is a very large number of customers, some of whom we acquired from Telenor and some that we have ourselves, about 100 million customers with very low levels of Arpu. So, these Arpus are sort of low double-digit,” Gopal Vittal, Bharti Airtel CEO and managing director was quoted saying.
Vodafone Idea CEO Balesh Sharma was quoted saying, “ It was a substantial number that were using it either only for incoming or had got Arpus below that of the average or that of unlimited customers. The Arpu of non-unlimited is about a fourth of the Arpu of the customers who take the unlimited plan. Therefore, everybody who goes up the chain is an upside, even within the non-unlimited, because now he or she is paying a rupee in the Rs 35 a month package, so that is an upside versus those who were not paying us even a rupee, unless many of them choose instead to go to unlimited package which is also very good for us because then there is an Arpu that increases there.” Sharma didn’t share the total number of subscribers falling in Vodafone’s low Arpu category.
If one uses an Airtel or Vodafone Idea SIM as a secondary mobile connection, chances are they are recharging with less than Rs 35 per month on an average. This second connection is generally used only for incoming calls and a base recharge of Rs 10 would ensure that the connection stayed active for the validity of the recharge. This move by the telcos is said to ensure that either their subscribers move to the higher priced plans of Rs 35 per month, or switch to their primary SIM operator.
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