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Waiving charges for low-end users to hit telcos' revenue

Telcos could each take a 1-1.5% one-time hit on revenue if they waive call charges for migrant labourer users.

, ET Bureau|
Last Updated: Apr 01, 2020, 06.28 AM IST
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telecom companies
Airtel and VIL have extended the talktime of over 80 million and 100 million customers respectively till April 17, while BSNL has extended it up to April 20.
Bharti Airtel, Vodafone Idea (VIL), Reliance Jio and state-run Bharat Sanchar Nigam (BSNL) could each take a 1-1.5% one-time hit on annual revenue if they waive a month’s call charges for migrant labourer customers headed home amid the lockdown, analysts and experts said.

Experts said most migrant worker customers of Airtel and VIL would be on minimum recharge plans, while in Jio’s case, they would make up a sizeable chunk of its 100 million-odd 4G feature phone users.

Airtel and Vodafone Idea, they said, could take a bigger hit than Jio on operating income as they incur additional costs to maintain 2G networks for these low-end consumers on minimum recharge plans. Jio, they said, won’t be stung as it runs a pure 4G network.

For now, Bharti Airtel, VIL and BSNL have extended the pre-paid pack validity for their low-ARPU customers, and given a talktime credit of Rs 10 to ensure continuous connectively during the Covid-19 induced lockdown.

Airtel and VIL have extended the talktime of over 80 million and 100 million customers respectively till April 17, while BSNL has extended it up to April 20.

Jio, in turn, has offered 100 minutes of calls and 100-odd text messages for free till April 17 to help its 4G VoLTE feature phone users stay connected during the lockdown. The moves came after the telecom regulator asked the Big 4 telcos to extend validity of prepaid users to ensure uninterrupted voice and data services during the lockdown. The Congress party too has urged telcos to waive a month’s call charges for their migrant labourer users to help them connect with families.

Rajiv Sharma, research head at SBICap Securities, estimates “Airtel, VIL and Jio will each take around a 1-1.5% hit on annual revenue if call charges are waived for a month for their migrant worker user base”.

He also estimates Airtel and VIL will take "around a 2-3% Ebitda hit annually," as they incur extra costs to maintain 2G networks for their low-end user-base on the minimum recharge plans. As of press time, Airtel, VIL and Jio did not reply to ET’s queries.

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