Telecom operators are now on a hunt for high-paying subscribers, rather than mere SIM additions, and are keen to upgrade low tariff users to post-paid schemes.
This, apart from giving high margins, would also ensure ‘stickiness’ of the customer on the network.
However, the dependency on pre-paid plans has not eroded and still continues as they are the preferred mode of payment, not to mention other benefits. Operators want more pre-paid, but revenue-generating customers on their network.
“The average revenues per user (ARPU) from post-paid subscribers are at least four times than that from a pre-paid user as minutes of usage of the latter is much lower. Hence, it would be a good idea for an operator to convert pre-paid to post-paid,” said PricewaterhouseCoopers India Executive Director Sivarama Krishnan.
“However, it also has its repercussions. A pre-paid user foots the bill instantly, if not in advance, while in case of post-paid it comes in much later,” Krishnan added.
The country’s total wireless customer base was at 890.60 million as of November 2012, according to the Telecom Regulatory Authority of India data. Of this, about 97 per cent of users are on pre-paid connections.
“There is a process of up-sell to post-paid schemes, even though ideally it should be a mix of pre- and post-paid schemes. This is because a large part of pre-paid users are not serious customers, while post-paid also brings more loyal customers,” Jaideep Ghosh, Partner at KPMG India, said.
NEW SCHEMES
The majority of new schemes launched in 2012 were for post-paid users as pre-paid margins are lower. The operators were also looking at data-centric services such as 3G and 4G to improve revenues, an analyst with a Mumbai-based brokerage said.
Uninor, a company that only offers pre-paid services, has launched more than 100 different variants and products in the past one year, officials said. Many of the telecom operators declined to divulge the number of schemes they have launched last year, but admitted that a majority were launched for post-paid users. “New products and schemes serve to both attract customers and increase usage. This is a natural evolution once an operator has reached a critical mass in terms of subscriber share. Pre-paid markets, being largely driven by youth segment, seek a fair extent of excitement with customers constantly seeking the latest and newest best deal,” Uninor Chief Product Officer Amaresh Kumar said.
Voice and SMS continue to be revenue earners in the Indian market. Consequently, offers relating to talk-time on recharge vouchers traditionally generate the highest revenues for mobile operators, he added.
PREFERRED MODE
“It is important to mention that pre-paid is the preferred mode of payment for most mobility customers across the nation and also the faster-growing market segment. As a youth brand, Tata DoCoMo is continuing to chase aggressive growth targets on pre-paid,” Gurinder Singh Sandhu, Marketing Head at Tata DoCoMo, said.
Tata DoCoMo views both pre- and post-paid as mere modes of payment, not different services, Sandhu said. Telecom companies cutting down on freebies, discounts and validity periods, a move that would result in subscribers paying 20-30 per cent more, is in the direction of retaining high-value customers. Post-paid or pre-paid doesn’t matter.