A customer at a Vodafone store in Mumbai. Photo: AFP

After surviving the predatory price war unleashed by Reliance Jio Infocomm, both Bharti Airtel and Vodafone Idea Ltd are now looking to shore up their average revenue per user ARPU to remain competitive.

They introduced “service validity vouchers,” which require customers to make minimum recharges to continue using their networks, in order to weed out inactive customers who use the phone mainly to receive calls.

In Vodafone Idea’s case, this resulted in a decline of 53.2 million subscribers or about 14% in the March quarter. However, this has led to a substantial improvement in per-user revenue to 104 rupees in the same quarter, from 89 rupees in the December quarter and 88 rupees in the September quarter. But it still has a long way to go as it is much lower than Jio’s figure (126.2 rupees in March quarter).

This move has helped Vodafone Idea, the largest telco by number of subscribers, to improve its balance sheet. In the March quarter, it narrowed its losses to 48.82 billion rupees (US$695.17 million), down from 50.04 billion rupees ($712.54 million) in the December quarter and 49.74 billion rupees ($708.27 million) in the September quarter.

At 117.75 billion rupees (US$1.68 billion), its revenue during the quarter remained flat sequentially after suffering a decline of 2.2% in the previous quarter and a 7.1% fall in the September quarter.

Its improvement in finance was also because the synergy benefits from last year’s merger of Vodafone and Idea are beginning to take shape. The company has reportedly achieved 60% of its synergy target.

Bharti Airtel, too got rid of low-value subscribers, and its annual revenue per user rose 21% in the March quarter to reach 125 rupees, very close to Reliance Jio’s 126.2 rupees.

On the other hand, Reliance Jio has been witnessing a continuous drop in its average monthly billings over the past five quarters.

From 154 rupees in the December 2017 quarter, Reliance Jio’s ARPU fell to 130 rupees in the same quarter in 2018 and to 126.2 rupees in the March 2019 quarter.

Industry observers believe a continuous slide in per-user revenues may put pressure on Reliance Jio to increase tariffs. This would be beneficial for the sector, as many operators had to wind up their operations due to pricing pressure and erosion of margins.

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