Vodafone Idea is reportedly reducing the minimum recharge amount per user, which is mandatorily required to keep the SIM card alive. According to reports across the internet, the minimum recharge amount is being reduced from Rs 35 to Rs 20, as the operator continues to try and consolidate its market position, despite a rapidly decreasing user base. The minimum recharge amount for prepaid users was introduced by Vodafone Idea in order to increase its average revenue per user (ARPU), in hopes of maintaining its overall revenue and potentially reducing prices.
Interestingly, the Rs 20 minimum recharge will offer users validity of 28 days, while the previous minimum amount of Rs 35 offered users a 30-day validity period. Even with the slightly reduced validity period, Vodafone Idea's new recharge amount will lead to significantly lesser overall expenses on an annual basis. The move is slightly confusing, as until now, Vodafone Idea has been emphasising on maintaining its minimum recharge amount for users in order to reduce the load of low revenue yielding users, who in turn were believed to be reducing the network's gross revenue margins.
Vodafone Idea has been facing considerable stress from Reliance Jio's influx, and has recently conceded the market lead to the latter. Ever since Jio's advent, Vodafone Idea, along with Bharti Airtel, has been forced to reduce data and calling prices as well as introducing bundled value plans on both prepaid and postpaid networks. Despite this, Vodafone Idea has seen one of the highest churn rates in the entire Indian telecom industry. With the newly reduced pricing, Vodafone Idea will hope to stem the flow of unsubscribing users, and will hope to regain some of its lost market share in the coming years.
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