Vodafone ropes in Cibil to check credit defaults

Written by Rachana Khanzode | Mumbai | Updated: Aug 28 2010, 08:09am hrs
Vodafone Essar has tied-up with the Credit Information Bureau (India) Ltd (Cibil) to determine the credit limit of its customers, based on their credit card history, before issuing post-paid connections. The initative will help the company assign better credit limits on post-paid connections.

The company will also be able to reduce defaults on post-paid connections, as bills would be directly debited from the credit card account. The firm has initiated a pilot project in Mumbai and will be launching it pan-India soon. Customers without credit cards will also be able to get post-paid connections as before, at lower credit facility.

Rohit Adya, CEO, Vodafone Essar (Mumbai circle), said: Though consumers can directly link credit cards to phone bill accounts for payments, many have not been availing this facility. With this initiative, we will help consumers adopt the facility as well as avail better credit facility on the phone account.

Telecom players at the moment do not have a system whereby defaulters account details, with a particular service provider, could be shared with other service providers.

Cibil would help Vodafone Essar in assigning credit limit based on the subscribers current credit card limit. All that the customer needs to do is flash his/her credit card and the credit limit will be assigned instantaneously through a software system.

Adya refused to share how many post-paid accounts were registered with the company.

According to Trai, in March 2010, the industry had an average of about 96% subscribers on pre-paid and about 4% on post paid, for GSM players. The average revenue per user (ARPU) for post-paid accounts of private service providers was Rs 543, compared to Rs 113 for pre-paid accounts.

ARPUs of telecom service providers have been falling as Japans NTT DoCoMo, Norways Telenor ASA and Russias Sistema set off a tariff war last year when they entered the Indian market.

The providers have since then been trying to improve on their rate per minute (rpm) through various measures, including cost-cutting. Vodafone is said to have a rpm of about 0.48 paise as compared to other industry players that enjoy a rpm of about 0.40-0.45 paise.