Jio withdraws low-value prepaid packs; Rs 98 is now the starting recharge voucher
Telco’s bundled recharge packs now start at Rs 98, Rs 19, Rs 52 plans removed after IUC recovery bid
The packs of Rs 19 and Rs 52 — valid for one and seven days, respectively— were available until the company started charging customers 6 paise per minute to recover the interconnect user charge (IUC), paid to the telco on whose network a call terminates.
“So Rs 19 and Rs 52 recharge plans were introduced for short-term requirements but there were few takers for them. It was removed after the IUC configuration,” said a person aware of the development.
The Rs 98 recharge, plus a top-up for the IUC charge, valid for 28 days is the lowest available to a Jio customer. It offers 2GB of data with 100 SMS per day and unlimited voice.
In comparison, Airtel's minimum 28-day plan starts at Rs 35 but it also has a tariff rate of Rs 23 for 28 days where outgoing calls are not allowed.
Bid to Boost Margin
Similarly, Vodafone Idea’s Rs 35 recharge is valid for 28 days with voice and data benefits. It has a cheaper option at Rs 24 without such benefits but the same validity. However, for those who have a Jio Phone, the minimum recharge plan starts at Rs 49 as before.
Jio didn’t respond to queries.
The telco recently started charging for voice calls to subscribers of other telcos to account for the 6 paise a minute termination charge it pays rivals Airtel and Vodafone Idea, a move also expected to boost margin and ARPU.
Analysts said the small denomination recharges have been typically used to prevent customers from moving to a rival because of validity expiry.
“Currently, the removal of smaller recharges suggest operators want to improve their ARPUs,” said Sandip Das, an industry veteran and former MD of Jio. Das had introduced the concept of small recharge packages while in Hutch in 2004.
For telecom operators, changes in prepaid tariffs make an impact on ARPU as more than 90% of subscribers are still on such plans.
Jio said September quarter profit rose by more than 45% from the year earlier, but sustained another ARPU drop to Rs 120 from Rs 122 in the previous quarter ended June, and from Rs 156 a year ago. Jio said that was offset by the rise in subscribers at the earnings press conference on Friday.
“At this point, we are much more focused on creating the digital ecosystem, which means getting more and more customers onto the network and ensuring that they consume more data,” said Jio strategy head Anshuman Thakur. “So, on tariffs, there is no reason to do anything different today.”
Still, it’s seeking to arrest the fall in ARPU, which is now below that of Bharti Airtel, where it’s expected to grow from Rs 129 clocked in the fiscal first quarter. Vodafone Idea’s ARPU was lower at Rs 108 at the end of June but is also growing.
Jio is following the route taken by Airtel and Vodafone Idea to boost the key metric. They had introduced minimum recharge plans of Rs 35 toward the end of FY19 to eliminate low-end inactive subscribers.