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Digital may offset fall in physical recharge

Consumption of video content will increase as millions are once again confined to homes, according to an analyst

Many prepaid customers have moved to digital for recharges.mintPremium
Many prepaid customers have moved to digital for recharges.mint

Online payments for mobile subscriptions are expected to offset the decline in physical recharge volumes, which could take a hit as states impose curbs on mobility due to a surge in covid cases.

Officials and industry experts said many prepaid customers have moved to the digital mode for recharges following the lockdown in 2020 and the closure of offline recharge outlets may not hurt this time.

Several states have imposed curbs to contain the spread of covid, while cities such as Delhi have announced a week-long lockdown, which not only have led to the closure of retail stores, but led to an exodus of migrant workers who depend on small-ticket recharges.

“Telecommunication services have been declared essential in Delhi, so many recharge stores are still open. We do not see any significant impact due to lower physical recharges this time as many of our prepaid customers shifted to digital last year," an official of a telecom company said, requesting anonymity.

Migrant workers and daily-wage earners, who are leaving Delhi and Mumbai due to lockdown fears, are expected to have either recharged their prepaid numbers, or will opt for other ways to renew their voice or data packs once they reach their native places, the official said. “It is too early to estimate the drop in physical recharge volumes," he added.

Experts said frequent recharges by prepaid customers to meet higher demand for mobile data will also offset the losses due to lack of offline stores.

According to a senior telecom analyst, consumption of video content will increase as millions are once again confined to their homes due to the restrictions. Remote working and online education will add to mobile data demand, he added.

However, given the distribution of India’s mobile data user base, with over 50% customers on 2G and use feature phones, physical recharge stores play an important role.

“A large part of the population could shift to digital recharges since last year’s lockdown. This trend is likely to continue. That said, many are still not fluent and comfortable with digital modes of recharges. One must realize that half the country still uses 2G and feature phones, and this population is more in rural areas, which do not have lockdowns yet," said Mahesh Uppal, a senior telecom expert.

Experts said the restrictions may not hurt revenues of telcos as much as last year. Revenues of Bharti Airtel Ltd and Vodafone Idea Ltd had dipped in Q1FY21, with a significant fall in their subscriber base due to massive reverse migration, job losses and discontinuation of services by those having multiple SIM cards.

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Published: 22 Apr 2021, 12:15 AM IST
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