Demonetisation: Mobile recharges fall 70-80%, subscribers hang up outgoing calls

rahul1117kumar

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Demonetisation is proving to be a double whammy of sorts for telecom companies that are badly bruised in the price war with Reliance Jio. Mobile recharges have dropped drastically over the past week, a big concern for an industry where 90% of customers subscribe to prepaid services.

Most of the mobile account recharges are paid for in cash, which is in short supply following demonetisation, and mobile recharge is one of the non-essential expenses that people are cutting down on to preserve cash. The impact of this on the industry will be visible in the December quarter performance of firms such as Bharti Airtel , Vodafone India and Idea Cellular, said analysts and industry insiders. Jio isn’t affected as its services are currently offered free of cost under a welcome plan.
Retail outlets dealing in recharge vouchers and electronic top-ups in Delhi, Kolkata and Mumbai told ET that footfalls for recharge have crashed by 70-80% over the past week, hurting their sales.

Retail outlets have stopped replenishing electronic recharge back-ups on a daily basis, and are now doing so over longer intervals amid dwindling customer demand.

“We are feeling the pain of demonetisation as most of our business is gone,” said Ajay Bansal, who runs a mobile recharges and accessories store in a plush New Delhi neighbourhood.

Neeraj Shibhari of New Delhi-based Laksmi Electronics said the number of customers at his store has dropped by two-thirds after the government on November 8 demonetised the Rs 500 and Rs 1,000 notes.

A top executive at one of the telecom operators said prepaid subscribers were hardly making outgoing calls to ensure their balances last longer, a trend, which if unchecked, could hit industry revenue.

Nitin Soni, director at ratings firm Fitch, said incumbent carriers could experience “some softness in overall revenue in the December quarter, which might be reflected in a 2% dip in ARPU (average revenue per user), triggered by a mix of the demonetisation effect and Reliance Jio’s continuing freebies”.

Bharti Airtel, Vodafone India, Idea Cellular and Reliance Communications didn’t respond until press time Thursday to ET’s queries on the impact.

A top Airtel executive, who spoke on the condition of anonymity, downplayed the immediate impact, suggesting that the cash crunch would reduce mobile recharges only by a maximum 10-12%. A Telenor India spokesman said “any move (demonetisation) of such magnitude impacts consumer spending in the short term”.

Sistema Shyam said mobile recharges had dropped some 20% amid the cash crunch. The ground-zero situation in Kolkata and Mumbai, according to people in the trade, is no different than Delhi with mobile recharge vendors concerned about mounting business losses.

Mrinal Ghosh of Sree Gopal Copiers and Nantu Saha of Green Corner, who’ve been doing mobile recharges and electronic top-ups for Airtel, Vodafone, Idea, Aircel, RCom and Tata Teleservices for over a decade in Kolkata, have seen a near-60% erosion in sales in the past eight days. “My overall recharge sales levels have plunged from upwards of Rs 10,000 a day to under Rs 4,000 as people are shying away from high-value vouchers like Rs 440, Rs 555 or Rs 1,111, and instead opting for tiny denominations of Rs 10, Rs 20, Rs 30 or Rs 50 amid the cash shortage,” Ghosh said.

Mohd Mulfaiz of Good Luck Sales, who does mobile recharges in Mumbai’s upscale Crawford Market, has seen a 50% fall in customer visits as he’s been unable to offer change. “People usually come for bigger recharges, but since I don’t have spare change, I’m forced to send many clients away,” he said.

demonetisation: Demonetisation: Footfalls down 70-80% at retail telecom outlets; subscribers curb outgoing calls - ET Telecom
 
They looted cusomers over years .. not they are paying back . It's like "har kutte ke din aate hain " :D
 
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