A lot of Vodafone and Airtel users in the country will not be able to use their phones in the coming weeks. Reason being, the telcos are allegedly going to terminate connections of over 200 million mobile users on their respective networks.
According to this report, users spending less than Rs 35 for their mobile recharges will have to look elsewhere to use an active mobile number. This calculation has been done by the telco to increase its average revenue per user (ARPU), which has seen a dramatic fall ever since Reliance Jio entered the telecom sector and disrupted the prices like never before.
Jio is also the telco to start offering voice calls for free, forcing its competitors to follow suit, leading to massive losses for the industry.
Apparently, both Vodafone and Airtel have over 150 million and 100 million 2G users respectively, on the network, mostly hanging on to the numbers for convenience sake. They aren’t exactly filling up the telcos’ coffers, which is a growing pain point for the telecom industry as a whole.
“We have about 330 million customers in wireless, but if you look at the pattern of consumption across the base you will find that there is a very large number of customers, some of whom we acquired from Telenor and some that we have ourselves, about 100 million customers with very low levels of ARPU. So, these ARPUs are sort of low double-digit,” Gopal Vittal, Managing Director and CEO, Bharti Airtel was quoted as saying in this Financial Express report.
It’s interesting that 2G networks might finally cease to exist, with 4G and possibly 5G taking over the network mantle in the coming years.
The Financial Report report points out that most of these 250 million with Vodafone and Airtel are using dual-SIM phones, which usually means that one SIM goes into using data, while the other one recharged for low amounts is used for making calls.
The decision to scrap its Rs 35 plan could result in higher revenue from the user. From the latest industry results, Reliance Jio clocked the highest ARPU at Rs 131 (with Rs 49 as its lowest plan), Airtel with Rs 101 and Vodafone Idea Limited with even lower ARPU of Rs 88.
Shutting down the 2G network would force these users to look at 4G services from these telcos or consider Reliance Jio as an option, with its ever-expanding reach of 4G connectivity.
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