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Vodafone sweetens postpaid offers to stave off Reliance Jio challenge

Incumbent operators have been forced to drastically cut prices to compete with Jio's dirt cheap data and free voice offers. The stakes are a lot higher for telecom firms in India in the postpaid segment.

Mail Today Bureau        Last Updated: July 3, 2018  | 08:46 IST
Vodafone sweetens postpaid offers to stave off Reliance Jio challenge

Vodafone India is wooing its postpaid customers with unlimited international roaming benefits, complimentary mobile insurance and Amazon Prime and Netflix subscriptions to stave off arch rival Reliance Jio from eroding its market share. The offer comes amidst an intense tariff war raging in the telecom sector triggered by the entry of Reliance Industries' startup Jio.

The fight has now expanded into the high revenue postpaid segment and is expected to further hit average revenue per user (ARPU) of incumbent players. Vodafone India on Monday unveiled free international roaming with unlimited calling and free data in 20 countries at a cost of Rs 180 per day as an add-on pack over its RED postpaid plans priced between Rs 399 and Rs 2999.

It also offers 1-year subscription of Amazon Prime at no additional cost, while 2-3 months Netflix subscriptions are offered on higher priced plans. The telecom operator has also announced a complimentary mobile insurance for consumers to protect their smartphones from damage.

"Differentiated offerings like complimentary mobile insurance, lowest bill guarantee reflect Vodafone's customer first philosophy," said Vodafone India associate director Avneesh Khosla.

Incumbent operators have been forced to drastically cut prices to compete with Jio's dirt cheap data and free voice offers. The stakes are a lot higher for telecom firms in India in the postpaid segment. For the top three big telecom operators in India, postpaid users make up only seven per cent of the total subscribers, but contribute more than 20 per cent to their revenues, according to global investment banking firm Jefferies.

The firm estimates that the ARPU for prepaid customers is about Rs 150, while it is much higher at Rs 500 a month for post-paid customers. A cut in postpaid prices will lead to a steep decline in EBITDA of these firms, Jefferies estimated.

The financials of these firms have already taken a beating with Jio's disruption. Keeping up the onslaught, Jio introduced a postpaid plan in May for Rs. 199 per month. The plan comes with unlimited voice calls and SMSes free of cost for the billing cycle, as well as 25 GBs of mobile data, among other benefits.

Incumbent players Vodafone and Airtel followed suit to offer postpaid subscribers more bang for their buck. Vodafone recently revised all its postpaid recharge plans by increasing data benefits, along with other features.

On Thursday, Airtel revised its postpaid plan priced Rs 649. The telecom operator has increased the data benefit to 90 GB data per month from 50 GB earlier.

While Jio made a profit of Rs 510 crore for the March quarter, the country's largest network by subscriber base Airtel made a loss of Rs 652 crore during the quarter. Jio's onslaught has also forced consolidations in the sector.

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