Airtel is facing a rapid decline in its average revenue per user (ARPU) due to a large number of inactive connections. The New Delhi-headquartered telco is reported to have ended its ‘lifetime free incoming calls’ plan and started asking users to maintain a minimum balance of Rs. 35 in order to continue using its services. The new move will help the company increase its ARPU over time. However, it is reported that the move would initially bring a loss of 50-70 million subscribers.
The Hindu BusinessLine, citing a senior Airtel executive familiar with the development, reports that the telco is not worried about the loss of users and optimistic about the ending of the lifetime free incoming plan. The operator is said to have believed that the new step will help generate more ARPU as many of the connections acquired under the lifetime free incoming calls plan weren’t being used.
Airtel considers the shift of users from feature phones to 4G-based smartphones as an opportunity. Also, it sees scope for increasing the ARPU by offering “better and more services” and “more content with partners”. The telco is offering Amazon Prime and Netflix memberships through its postpaid plans for some time and offering cashbacks to customers purchasing a new 4G smartphone.
In October, Airtel launched an Airtel TV Premium feature on the Airtel TV app to deliver premium content such as ZEE5 originals, NDTV Hop, more than 300 live TV channels, over 10,000 movies from Eros Now, Hotstar, Hooq, ALT Balaji, Hoichoi, and FastFilmz. The telecom major also acquired Bengaluru-based AuthMe ID Series to enhance the Airtel X Labs for building new artificial intelligence (AI), Internet of Things (IoT), augmented reality (AR), and virtual reality (VR) developments.
Airtel reportedly decided to ditch its lifetime free incoming calls plan in October and replaced some of its existing recharge options with ‘minimum ARPU’ packs. Vodafone Idea also took similar moves in the recent past. However, the Telecom Regulatory Authority of India (TRAI) directed the telecom operators not to immediately disconnect services of customers and notify them in a clear and transparent manner about the changes.
MD and CEO (India and South Asia) Gopal Vittal earlier this year underlined the significant drop in Airtel’s ARPU. “I think we have hit the bottom in terms of ARPUs and pricing,” Vital had said in an interview. “I think both have to lift from here and given this industry structure it will lift. At the end of the day, we want a profitable and sustainable market share.”
The ARPU of Airtel and Vodafone Idea as of the September quarter stood at Rs. 100 and Rs. 88, respectively. However, Reliance Jio, with its competitive recharge options and massive data offers, gained with an ARPU of Rs. 131 as of the same quarter.