TRAI directs telcos to clearly inform prepaid subscribers of minimum recharge requirements

When Reliance Jio entered the telecom sector and introduced free services, followed by low priced prepaid plans, other telcos like Airtel, Vodafone and Idea also implemented different strategies and started offering discounts on their services. However, this resulted in low revenue and even lowered profits for the companies and now, Airtel and Vodafone Idea are implementing a new policy to increase revenue generation, which could cost them some of their consumers. We previously reported that the two telecom operators are imposing a minimum recharge restriction of Rs 35 on their prepaid customers and turning their lifetime SIM connections to one with a limited validity. 

As per Airtel, their users will need to recharge with a minimum of Rs 35 to keep their connection active. If a user fails to do so, their connection will be barred from making calls and if a minimum recharge is not made in 15 days, incoming calls will also be barred on their connection. However, the remaining balance left on their SIM, if any, will still remain and the telco will deduct Rs 20 every three months to not deactivate the connection. There is a grace period of 90 days before a SIM card is deactivated by the telco and a user can recharge with a minimum of Rs 35 anytime to re-activate it. The minimum prepaid recharge requirement was also reportedy confirmed by Vodafone and both telcos are said to be sending text messages to their subscribers asking them to mandatorily recharge their accounts.

However, after Airtel and Vodafone Idea were found sending minimum recharge messages to their consumers, TRAI reportedly wrote to the two companies asking them to make the clearly inform subscribers of the change within three days. Mint reports – "Trai has asked operators to duly inform subscribers within three days in a clear and transparent manner the date on which the current validity of an existing plan would expire and the manner in which the subscriber can opt for available plans including minimum recharge plan using subscriber’s available prepaid account balance." The regulatory body reportedly wrote to telcos saying, "Till such time operators should not discontinue services of such customers who have balance in prepaid accounts equal to minimum recharge amount.”

Gopal Vittal, Airtel India’s Managing Director and Chief Executive Officer had earlier spoken about the minimum prepaid recharge requirements. In a transcript of Airtel's earnings call, Vittal said that even though there are about 330 million customers on the company’s network, there are around 100 million customers with extremely low average revenue (APPU). Additionally, he also reiterated the changes made by the company and introduction of packs with raised ARPU, with the minimum ARPU starting at Rs 35. 

Vittal stated, “This is something that we have seen some good results in and we are now rolling this out across the country. In fact, in the last seven days, we have already rolled out across the country, so if you see tariffs now there are brutally simplified seven or eight tariffs. With minimum ARPU plans starting at Rs.35. So that is on one side of the market, which is at the lower end.” 

This move by the telcos basically ensures they that a user spends at least Rs 35 every month on recharge. This will bring in more revenue for the telcos from users who don’t perform any regular recharges and maintain a minimum amount so that their connections are not deactivated. This is quite common since 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.

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