Tata DoCoMo to hang-up post-paid services in Bengal, Bihar

Abhishek Law Kolkata | Updated on March 12, 2018 Published on May 28, 2013

Move to optimise profitability; Kolkata will not be hit

Tata DoCoMo, owned by Tata Teleservices, is planning to discontinue post-paid services in West Bengal (except Kolkata) and Bihar from June 17. Pre-paid services will, however, continue.

Tata DoCoMo offers CDMA and GSM services; both of which will be discontinued in the two regions. Official estimates of subscribers to be impacted were not available. However, unofficial figures suggest almost one-lakh users to be impacted.

Kolkata and West Bengal are considered as separate telecom circles. Tata DoCoMo has 29 lakh subscribers in Kolkata. While post-paid services will be discontinued in West Bengal, those in Kolkata will not be impacted.

While the company says that the move is aimed to “optimise profitability”, market sources feel that low customer-base has turned the company’s post-paid schemes unviable in the region. A company official termed the move to discontinue services as “scaling down of operations”.

“Tata Teleservices is constantly seeking to optimise profitability in each market it operates. As appropriate in each market, we have taken steps including on increasing pricing and reducing costs to optimise our overall returns from that geography. These steps are a part of this ongoing and continuous exercise,” a company spokesperson said in an e-mailed response to Business Line.

Messages asking customers to switch or move to another operator (called port out) have already been issued, a source said. Tata Teleservices has 68–70 million subscribers nationally. Services across its other geographies will not be affected.

According to market sources, the average revenue per prepaid user (ARPU) stands at Rs 100-123 a month. ARPU from post-paid users stands at Rs 300/month.

Higher cost

However, operation costs and initial investments on post-paid users are nearly double that of pre-paid ones. Hence, it is difficult for new entrants in a market to have post-paid users, Kunal Bajaj, an independent telecom analyst said. DoCoMo is the sixth largest telco in the market.

Around 3-4 per cent of its subscribers in Bengal (out of 21 lakh) and Bihar (37 lakh in Bihar & Jharkhand) are post-paid users, as against an industry average of 5-7 per cent. Bihar & Jharkhand together form a telecom circle. The remaining 97 per cent are pre-paid users.

“Operators try to amortise the cost of getting a new customer through pre-paid volume sales or on a long-term billing basis,” Bajaj added.

Tata Teleservices introduced CDMA services under brand “Indicom” in 2006. Following, a tie-up with NTT DoCoMo (of Japan), it introduced GSM services in 2008 under “Tata DoCoMo” brand.

In 2011, all services were brought under the umbrella of “Tata DoCoMo”.

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Published on May 28, 2013
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