Vodafone Idea, India’s No.1 telecom operator, said it has decided to withdraw all existing recharges and replace them with five coupons with specific validity.
The recharge balance has to be used within the validity period, or it will be lost.
With this, a customer has to spend at least Rs 35 per month to keep his Vodafone or Idea number active. Earlier, customers could recharge with Rs 10 or 100 and the amount would stay on their balance till it was consumed in the form of call, SMS or data charges.
Such a policy has already implemented by rival Bharti Airtel.
The five coupons being brought out by Vodafone Idea are priced at Rs 35, 65, 95, 145 and 245.
The first three coupons come with a validity of 28 days, after which the balance credited by the recharge would automatically lapse whether the user has consumed it or not (see chart). The last two have longer validity periods.
Those who recharge with Rs 35 per month will get a talk time balance of Rs 26 and will be charged at Rs 1.5 per minute of outgoing call.
Those who recharge with Rs 65 will be charged 60 paise per minute and those who recharge with Rs 95 will be charged 30 paise per minute.
The Rs 245 recharge will come with a limited validity talk time of Rs 245, 2 GB of data and 30 paise per minute calling.
Besides this, all the ‘first recharge coupons’ or FRCs will be withdrawn.
Instead, new customers have to recharge with one of the unlimited plans or with Rs 76.
Vodafone Idea said all the above packs will be priced uniformly across India.
Under the new scheme, said Chief Operations Officer Ambrish Jain, each customer will have to generate a minimum revenue of Rs 35 per month for the company to stay on the network.
The move is expected to result in a significant reduction in the incoming-only and inactive customer base, he told investors in Mumbai yesterday.
The move is hardly a surprise as rival Bharti Airtel too had announced such a move a few days ago.
Jain said that the current situation, in which there are “hundreds of” different recharge plans has resulted in high administration, IT and customer support costs.
He said the company hopes to move more and more of its prepaid users to ‘unlimited packs’ with this move.
Unlimited packs are similar to the above plans, except that they contain unlimited voice calling.
Unlimited plans start at around Rs 150 per month.
At present, only about one fourth of the company’s prepaid customers are on unlimited plans.
Jain said an average unlimited plan customer generates four times as much money for Vodafone Idea as a regular prepaid customer.
Besides, these plans are easier to support and implement compared to traditional recharges.
In the current scenario, Jain pointed out, the company was enduring high costs to maintain low-revenue customers.
With all the prepaid schemes withdrawn and only five coupons on offer, Vodafone Idea stands to save money by cutting down on IT systems, call centers and back offices, he added.
Unlimited plans were first introduced by new entrant Reliance Jio, which made ‘voice free’ when consumers bought its data plans.
Due to the bigger-than-expected success of the plans, Reliance Jio today has an average customer revenue of around Rs 135 per month, compared to about Rs 100 for Airtel and Vodafone Idea.
The move by Airtel and Vodafone Idea to stop all unlimited validity recharges is likely to result in a sharp decline in the number of mobile connections in the country.
Many users have held on to their Airtel and Vodafone Idea numbers even after moving most of their usage to Reliance Jio. Such users will have to either start spending Rs 39 per month or abandon their legacy connection by porting their number.