Vodafone Idea launches Rs 45 per month plan to check decline in subscribers

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Updated: July 30, 2019 7:03:58 AM

Vodafone Idea on Monday said that for voice-only 2G subscribers it has launched a new Rs 45/month tariff plan to check decline of its subscribers at the lower end.

The new recharge plan offers calls at 1 paise/second giving more value to the customers, the company management told in a post-earnings call.

Vodafone Idea on Monday said that for voice-only 2G subscribers it has launched a new Rs 45/month tariff plan to check decline of its subscribers at the lower end. The new recharge plan offers calls at 1 paise/second giving more value to the customers, the company management told in a post-earnings call.

“We witnessed that customers were seeking more value from validity packs after two or three recharges. So, we introduced a Rs 45 pack pan-India last week which gives full talk time and calls at 1 paise/second. The response has been encouraging so far,” Balesh Sharma, chief executive officer, VIL, said.

Vodafone Idea, which posted a decline in revenues as well as subscribers during the quarter in its earnings announced late last week, faced problems at both the ends of its user base — higher and lower.

While high paying customers downtraded to lower plans in the post-paid segment, a chunk of low paying customers who had recharged under a minimum Rs 35 per month plan during the fourth quarter, did not carry on during the April-June period. It hopes that with the new Rs 45 plan 2G subscribers who deserted it during Q1 will either come back or more such users would go for monthly recharge.

Vodafone Idea had introduced ‘service validity vouchers’ on a national basis during Q3 of last fiscal, which required customers to make a minimum recharge of Rs 35 with 28 days validity. This resulted in a decline of 53.2 million subscribers as low Arpu customers migrated their spending from multiple SIMs to single SIM, taking the overall subscriber base to 334.1 million versus 387.2 million in the previous quarter. In Q3, VIL had lost 35.1 million such customers.

“Upside from minimum recharge construct that supported Q4FY19 revenue stability did not sustain for even a quarter; down-trading at the top and top-middle segments continued as well. We wish the companies did a better job of providing some sense of Arpu (average realisation per user) cohorts or at the very least, guide the Street better on where we are in terms of the Arpu down-trading cycle. We are amazed how many lazy customers VIL is still carrying, customers who are still figuring out that they could choose a less-for-more plan or down-trade, in simple words. If ever there was a time to start disclosing some details on customer cohorts (by Arpu), it is now,” Kotak Institutional Equties wrote in its report.

On Monday, VIL’s shares also plummeted 27% on weak earnings and the company’s inability to consolidate on some gains during the Q4 of the last fiscal. The company’s shares closed at Rs 6.77 on the BSE.

Vodafone Idea CEO Balesh Sharma had made a candid statement on July 26, “We are delivering on our stated strategy although the benefits are not yet visible in our top line.”

The company’s net profit during the April-June quarter widened to Rs 4,908 crore compared to Rs 4,882 crore in the preceding quarter. It had reported a net loss of Rs 5,004.6 crore at the end of December quarter, and a net loss of about Rs 4,974 crore in the preceding quarter ended September.

Revenue at Rs 11,270 crore declined 4.3% sequentially, after remaining flat in the previous quarter and suffering a decline of 2.2% in the December 2018 quarter.

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