Mobile companies reducing freebies to boost margins

New Delhi, Nov 21: Indian telecom operators, in a bid to increase their operating margins, are now reducing freebies and talktime, according to a report of Economic Times.Usually, telecom operators resort to hike in pulse
mobile companies reducing freebies to boost...
India TV News Desk November 22, 2012 16:27 IST
New Delhi, Nov 21: Indian telecom operators, in a bid to increase their operating margins, are now reducing freebies and talktime, according to a report of Economic Times.



Usually, telecom operators resort to hike in pulse rates to increase their profits but that has now become very unpopular with Indians. Instead this new method of reducing freebies and talktime is less noticeable and thus would attract less protest.

According to the report, leading mobile operators including Bharti Airtel, Idea Cellular, Vodafone, Tata Teleservices and Aircel have begun a new round of reducing freebies and slashing talktime on pre paid discount vouchers.

"For instance, Bharti Airtel has reduced the validity to 60 days from 90 days of a discount voucher available in Delhi costing Rs 28 that allows subscribers to make national long-distance calls at Rs .012 per second," the ET report said.

Similarly, the report added, in Maharashtra, Idea Cellular has increased the price of a discount voucher to Rs 97 from Rs 72 that allowed users to call at 1.2 paise per second for a period of 90 days. Vodafone in Kolkata has reduced the number of free minutes to 55 from 65 on a 'minutes pack' valid for five days costing Rs 22. Tata Teleservices has tweaked a similar 'STD seconds pack' costing Rs 196 in Karnataka where it has reduced the number of free seconds to 33,000 from 36,000 over a month.

The hike in tariffs is not unexpected as despite the increasing number of mobile subscribers by around 12 million every month, the average revenue per user, an important indicator of the financial health, for the Indian players varies between Rs 105 per month to Rs 180 per month only.

Airtel, infact, some time back had also said, "Telecom is probably the only industry where despite increasing inflation, tariffs have been falling unabatedly. Continuously declining margins, high 3G and BWA auction prices, constrained spectrum and rural roll out aspirations leave us with little choice but to make some price corrections."
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