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India telcos reduce prepaid freebies to boost margins

With revenues staying flat, mobile operators are starting to cut down on freebies or increase prices that come with discount vouchers used by the majority of prepaid subscribers.
Written by Jamie Yap, Contributor

Mobile operators in India have started a new round of initiatives to improve their margins, this time, by reducing freebies and talktime which come with discount vouchers used by prepaid subscribers. 

Faced with stagnating revenues, these service providers are hoping these moves would improve sales and margins. 

Some 96 percent of India's 906 million mobile connections are from prepaid subscribers. Special tariff vouchers, also called discount vouchers, are used by the bulk of prepaid mobile customers and make up nearly 70 percent of operators' revenues which have remained stagnant for the last three years, Economic Times reported Thursday.

Over the last 15 to 20 days, operators including Bharti Airtel, Idea Cellular, Vodafone India, Tata Teleservices, and Aircel have subtly tweaked the terms of various types of discount vouchers to help lift margins, a move which first appeared about a year ago, the report said. However, this latest round of modifications differed from the earlier strategy of raising call rates in select telecom zones and gradually extending it to the whole country over a year-long period.

"There is definitely room to reduce low value and free minutes in all markets across the country, given the state of telecom industry. However, Airtel will continue to be marked to market and provide value to its customers," an Airtel spokesperson told Economic Times. The other telcos did not respond by press time.

According to the Economic Times, Bharti Airtel cut down the validity date for discount vouchers which cost 28 rupees (US$0.50) from 90 days to 60 days in Delhi. Idea Cellular raised the price of a similar discount voucher in the state of Maharashtra from 72 rupees (US$1.30) to 97 rupees (US$1.76), and Vodafone in Kolkata slashed the number of free minutes from 65 to 55 minutes on vouchers valid for five days costing 22 rupees (US$0.39).

The telcos' latest move comes two months after the Telecom Regulatory Authority of India (TRAI) reported the number of mobile subscribers in the country dipped slightly from 934.09 million in June to 913.49 million in July.


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