Voda Idea looks to ring-fence users with Rs 20 recharge

NEW DELHI: Vodafone Idea (VIL) has lowered its minimum recharge plan threshold to Rs 20, from Rs 35, in the first major change in strategy by new chief executive Ravinder Takkar to stem the exodus of subscribers, which has dragged topline despite a rise in average revenue per user (ARPU).

According to people aware of developments, the latest initiative by Vodafone Idea — which dropped to third place by revenue market share (RMS) behind Reliance Jio Infocomm and Bharti Airtel — is being offered to select subscribers through messages.

ET checked with multiple retail outlets of the telco and they confirmed the latest price plan with a validity of 28 days. The operator, however, did not respond to ET’s queries till press time on Friday.

One of the persons mentioned above said Vodafone Idea’s strategy is to transform its current crop of inactive customers to active by getting them on board with the Rs 20 recharge plan. “This way, instead of them exiting the telco, they will start billing for the telco. ARPUs will increase; so will the customer base and revenue, and the operator can also get subscribers to upgrade to higher tariffs plans later,” said the person. “This plan won’t be mass marketed so those on Rs 35 do not come down to Rs 20 recharge. Hence, selective customers have been informed of the plan.”

Rajiv Sharma, co-research head, SBICaps Securities, said Vodafone Idea needed to act fast to arrest further subscriber exits, which can be upgraded later. But the immediate impact could be a fall in ARPU by 3-4%. He further said Airtel was unlikely to follow suit unless Vodafone Idea manages to show “meaningful” subscriber additions over the next couple of months.

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