Reliance Jio entry rains cheaper options for prepaid users

Bharti Airtel and Vodafone India are offering more data benefits and cheaper tariff plans to prepaid users to keep rival Reliance Jio from scooping up their market share


There has been an upheaval in the Indian telecom sector since the commercial launch of Reliance Jio Infocomm as the company is offering free voice and data till 31 December to all subscribers. Photo: Abhijit Bhatlekar/Mint
There has been an upheaval in the Indian telecom sector since the commercial launch of Reliance Jio Infocomm as the company is offering free voice and data till 31 December to all subscribers. Photo: Abhijit Bhatlekar/Mint

New Delhi: For Indian telecom market, prepaid mobile subscribers are the driving force covering almost 95% of the total mobile subscriptions generating revenue of around 80% for the companies.

As per Bernstein analysis and Telecom Regulatory Authority of India (Trai) reports, postpaid subscribers made up only about 5% of the total users in India as of March 2016.

The telcos have recently been introducing lucrative offers such as increasing data benefits and introducing cheaper tariff plans, but the trend suggests that such offers are targeted at prepaid users more often than not.

For instance, Bharti Airtel Ltd, in a span of four months—just before Reliance Jio’s expected launch—brought in a number of attractive offers for its prepaid customers. Last month, Airtel announced tariff reduction for prepaid customers by as much as 80%.

Also Read: Why haven’t rivals reacted to Reliance Jio’s aggressive tariffs?

Vodafone India on Tuesday launched tariff plan for prepaid users called Flex which will enable users to recharge with a single flexible plan eliminating the need to buy multiple tariff plans for roaming, data, sms and reducing call rates separately. The plan, company said, aims to make using data and voice usage on a single plan convenient and interchangeable depending on personal consumption of a customer. The company said that one-third of its total 199.7 million subscribers are prepaid.

Analysts see more such pricing changes and new offers coming, especially for prepaid customers as companies try to retain their market share with increasing fierce competition. Also, the companies shall lock doors for its prepaid customers as its easy to lure them away.

Also Read: Why cheap data won’t be enough

“The sector is all set to see a lot of churning in the coming months with the incumbent operators trying new and innovative strategies to retain their market share,” Care ratings said in a report issued on 19 September.

In India, for telecom users with low to medium usage, prepaid connections are most preferred because of manageable budget constraints and no need of monthly rentals, also disposing SIM cards and buying new connections comes easy to prepaid customers than postpaid users.

There has been an upheaval in the Indian telecom sector since the commercial launch of Reliance Jio Infocomm Ltd as the company is offering free voice and data till 31 December to all subscribers. It has also promised cheap tariff plans after the welcome period offer. The company has set a target to cover 90% of the population by March 2017 and acquire 100 million subscribers in “shortest possible time”.

With such ambitious entry made by Jio in the market, the incumbents and new entrant have been in a war lately over availability of interconnection points with Reliance Jio making fresh allegations against other operators of rejecting most of the mobile number portability (MNP) requests for its subscribers.

Sponsored Links by Revcontent