The Minimum Recharge Plans launched by Bharti Airtel and Vodafone Idea Ltd (VIL) to clean up their low-paying subscriber base have resulted in a significant reduction in user base.
In the third quarter of FY19, VIL reported a 35 million reduction in user base and another 53 million during the fourth quarter.
sIts total subscriber base was 334 million as of March end, according to a report by research firm Morgan Stanley.
VIL’s management had said that there could be some residual impact that could flow into the first quarter of fiscal 2020, it added.
Service-validity vouchers
VIL, during its earnings announcement earlier this week, said that the sequential stabilisation of revenues in Q4 benefited from the introduction of ‘service validity vouchers’ across the country in Q3, which required customers to make a minimum recharge of ₹35 (for a validity of 28 days).
This had resulted in a fall in user base as ‘Incoming-only’ or ‘Low ARPU’ (Average Revenue Per User) customers migrated their spending from multiple SIMs to a single SIM.
According to the Morgan Stanley report, Airtel also reported a reduction of 48.5 million users during the third quarter of the year. The New Delhi-based firm is yet to disclose the fourth quarter numbers due to the ongoing rights issue. The subscriber market share of VIL fell to 32 per cent in FY19, compared with 36 per cent in FY18, while that of Airtel was steady at 26 per cent.
Reliance Jio Infocomm gained market share at the expense of VIL and other operators, with the Mukesh Ambani-led company improving subscriber market share to 29 per cent in FY19 (16 per cent in FY18).
VIL reported a 17 per cent quarter-on-quarter improvement in ARPU, a gauge of a telecom firm’s financial strength, to ₹104 in the fourth quarter on clean-up in low paying or non-paying subscriber base.
Airtel’s ARPU have improved 21 per cent on a QoQ basis, primarily due to the same reason.
VIL’s EBITDA margin improved to about 13 per cent in Q4, while for Airtel’s India wireless segment, it improved to 23 per cent, the report said.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.