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Similar tariffs by telcos may push users to discard multiple SIM cards


The telecom sector could see subscriptions drop by up to 60 million in the next six months or so as customers increasingly discard multiple SIM cards from different operators in favour of one, driven by similar tariffs plans and services.

Industry executives and analysts said minimum recharge plans recently introduced by second-ranked Bharti Airtel and market leader Vodafone Idea for low-value users have set a floor on pricing, bringing them almost at par with latest entrant Reliance Jio’s minimum tariff plan. This will further push customers to choose one of the three, they said.

This would bring down the overall subscriber base from nearly 1.2 billion recorded at August end, while the number of those with new SIM – or unique subscribers – will rise a bit, reflecting some with new connections. Of the overall base, some 730-750 million currently are unique customers, or single SIM holders. The rest hold two SIMs.

“There will be a 25-30 million drop in subscriber numbers in the next six months which in this case translates to number of connections being given up. This is because of the SIM consolidation that is taking place,” said Rajan Mathews, director general of Cellular Operators Association of India (COAI), which represents all three private telcos.

An analyst, who did not want to be identified, though, expects the next two quarters to see 15-20% churn, which is some 45-60 million connections.

“Customers used dual SIMs to take advantage of difference in price points and quality of services across geographies. Now that both price and service quality are similar across operators, need for multiple connections is no longer critical,” said Hemant M Joshi, partner, technology, media and telecommunications, at Deloitte India.

The shift to one SIM will be good for the industry as telcos can see actual penetration levels and strategise their expansion plans accordingly, Joshi added.

To ensure customers remain active and keep billing, Bharti Airtel and Vodafone Idea recently introduced packs with minimum recharges of Rs 35, Rs 65 and Rs 95 with a 28-day validity period. This means that users who do not recharge their plans would see outgoing calls blocked in a month and incoming ones in 45 days. The minimum plans for both telcos now compare with Jio’s minimum Rs 49 recharge plan for JioPhone users, forcing subscribers to make a choice.

The aim of the telcos is to get customers to generate revenue and not remain connected without getting billed, which will help their average revenue per user (ARPU) — a key industry parameter — which has declined sharply over the last two years due to brutal price competition.

“This strategy leading to SIM consolidation will also weed out lower ARPU customers and with stability when prices increase, the minimum amount recharges will go up as well,” said another analyst, who did not want to be identified.

Sanjay Kapoor, former chief executive of Bharti Airtel (India), said the more important index will be to watch the growth in unique data subscribers. He added that the expansion of 4G will “decimate SIM multiplicity” as a 4G slot can take only one SIM, which will be “accretive” to the industry.

Gopal Vittal, chief executive of Bharti Airtel, said at a post-earnings call that he expects “prepaid ARPU to start improving by the fiscal third quarter onwards on account of the minimum recharge plans, which should also lead to a reduction in the company’s selling, general & administrative (SG&A) expenses”.





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