Free talk time and free data discounts in prepaid plans are expected to come to an end soon with telcos in a tight spot. Particularly as they face high opex and a near saturated tariff structure in the aftermath of recently concluded costly 2G spectrum auction which touched Rs 61,000 crore.
“Telcos are working towards no freebie era in the pre-paid section in the coming days to raise revenue,” highly placed sources in RCOM told The Pioneer. In fact, the current fiscal 20014-15 is expected to be hard for the telcos as they brace for higher capex being faced with high investments in licence fees, mergers & acquisitions and technology upgradation. Companies will now be basing their operations on the ‘no freebie revenue model’ and will cut out on the freebies, said industry sources
Triggered by the latest round of hikes in tariffs by Vodafone, Airtel and joined in by RCOM with a headline tariff rate hike of as much as 20 per cent. Airtel has reduced its talk time from Rs 48 to Rs 38 as against earlier when it was available for the full paid-up amount. While Vodafone has reduced its validity from 30 days to 24 days on promotional pack vouchers.
On Wednesday, RCOM joined the bandwagon and announced as much as 20 per cent hike in headline rates and base rates has been raised from Rs 1.5 to Rs 1.6 per second in its prepaid plans. Vodafone, Delhi business head Subrat Padhi had said last month that there was no further room for any scaling down of tariffs in either data or voice given the saturation in tariffs.
Highly debt ridden mobile operators are faced with shrinking bottomlines with declining Average Revneue Per User (ARPU) and Revenue Per Minute (RPM) in recent months even as tariffs have reached a saturation point and the operators expressing their inability to reduce tariffs any further in both voice and data. RPU for GSM has gone down from 0.30 to 0.28 or 0.29 while ARPU has gone down from 109 to 96 to 105 as per TRAI till 2013.
International consultancy InRa has in fact revised downwards the ratings for India telecom sector from stable to negative for the fiscal 2014-15. It also believes that in the coming days Indian telecom operaters would have to aim at the rural segments which has a low ARPU and has still has low data and voice penetration.
Indian telecom operators depend largely on the prepaid services which account for as much as 90 per cent of the revenues. And thus telecom companies in India are highly focussed on the pre-paid segment rather than post paid segment.