99% Of Mobile Users Are Prepaid

[hritik123 4]

99% of new mobile connections in India are pre-paid

Economic Time

11 Feb 2009, 0430 hrs IST

NEW DELHI: Call it the death of post-paid mobile user in the world’s fastest-growing mobile market. India has all but completely rejected the post-paid option, with nearly 99% of new mobile user additions in the country accounting for by pre-paid connections.

With mobile operators increasingly doling out cut-price offers for newer, often poorer users, customers are also embracing this platform with gusto.

Consider this: Bharti Airtel, India’s largest mobile company by user base, added a record 8.1 million-plus new customers during the October-December 2008 quarter, of which 99.6% were pre-paid users. Ditto for Reliance Communications, Vodafone Essar and Tata Teleservices. About 99.9% of RCOM’s 5.5 million new additions in the quarter went in for a pre-paid connection, while for Vodafone Essar and Tata Teleservices, the numbers were 97.3% and 96%, respectively.

“Fundamentally, the Indian consumer prefers pre-paid as it empowers him. The customer wants to control how and when to spend and sees real value on a call-by-call basis in pre-paid,” said Bharti Airtel’s chief marketing officer Sanjay Gupta.

The switch towards pre-paid from post-paid connections has been steadily climbing. From accounting for about 60% of the country’s total subscriber base in 2005, pre-paid users now constitute over 92% of India’s mobile customer base.

Bharti’s numbers for October-December 2007 quarter show that a little over 95% of new additions preferred pre-paid connections. For Reliance and Vodafone Essar, the comparable numbers were 96% and 92%, respectively, of net customer additions.

Mr Gupta said that pre-paid growth was aided by three factors. “First, the revolutionary lifetime pre-paid concept has done away with the cost of entry and validity. From Rs 999 earlier, it costs a mere Rs 99 for a lifetime connection, which does not require a recharge to stay connected. Second, unlike most other countries, the consumer does not pay for an incoming call. Third, pre-paid follows a sachet approach as customers can recharge for as low as Rs 5 or Rs 10 when they want to use their mobiles,” he said.

Vodafone Essar’s marketing head Harit Nagpal says it also suits operators too to have their new customers on the pre-paid platform “Post-paid customers need verification, credit rating and collection infrastructure in every geographical service. Today, new additions are mostly from rural and interior India, which lacks this infrastructure. Unlike other countries, a significant majority of India’s population do not hold a bank account which acts as a collection infrastructure,” he said.

Mobile operators also point out that a post-paid connection required a minimum spend — known in telcom industry parlance as average revenue per user (ARPU) — to be viable. “Since, most of the new entrants cannot bring in this ARPU, operators want them on pre-paid,” Mr Nagpal added.

According to a top executive with another GSM player, telcos’ operational expenses increase multiple times when it comes to post-paid users: “From generating multiple billing cycles depending on the tariff plan chosen by the customer to increased IT deployments to higher manpower requirements, the costs shoot up,” the executive said.

But, Bharti's Gupta is of the view that rural customers will always choose pre-paid connections. "Typically, Indians start with pre-paid as they are unsure of the usage. Over a period of time, after they are accustomed to using a mobile phone and the tariffs, a small segment switches to post-paid," he said.

Besides mobile customers in India also do got get the usual benefits associated with post-paid connections such as free handsets, lower tariffs and discounts on value-added services which are available in more developed markets. With call tariffs in India already one of the lowest in the world, post-paid connections offer little value to the typical Indian mobile user.

What do u say guys

[Arun 795]

Where does Economic Times get the figure of 99% from? I don't think it is correct.

[savramesh 37]

they may have taken survey from all telecom companies..

note : they say that 99% of NEW CONNECTIONS ADDED are prepaid and not existing customers.

this may be true..

Edited February 11, 2009 by savramesh

[hritik123 4]

yes i think the trend in new connexions is definetly prepaid

[ACS 130]

Corporates own the biggest chunk of Postpaid connections.

Any currently, they are terminating lines & not subscribing, which explains this weird ratio.

As pointed out above, its just a survey on recent new connections.

But despite that, the figures are still crazy.

Edited February 11, 2009 by ACS

[Himanshu Singh 19]

It may not be entirely correct but its not too much off the mark. even if 90% of all connections are prepaid,its a huge figure. it makes sense too. for a monthly expenditure of 31 in prepaid one can enjoy all calls@1. postpaid arpus for all telecom companies cant be more than 450-500.in the same expenditure one would rather use prepaid than stick his neck out for erroneous billings of companies. since lifetime prepaid came i am sure postpaid has become an expensive affair for sub500 customers.

[dkaile 1,051]

99% of the consumers are not fools; only on this forum I see people advocating post paid over prepaid, nowhere else; they are not ready to accept the rationale which is driving 90%+ of our public; I fully subscribe to this view of going prepaid... It is the truth of today's time and age which we must accept...

[kshah 452]

Though I am more comfortable with post paid due to my own limitations I certainly believe that upto mid range users (upto Rs. 750 usage) pre paid is cheaper and best option. One may save upto 30% on mobile expenditures.

[ACS 130]

99% of the consumers are not fools; only on this forum I see people advocating post paid over prepaid, nowhere else; they are not ready to accept the rationale which is driving 90%+ of our public; I fully subscribe to this view of going prepaid... It is the truth of today's time and age which we must accept...

It is not entirely reliable to go with masses/public perception when it comes to telecom spending habbits.

As you know, majority of the ppl are in the lower income bracket.. do they have much choice?

So there itself your 75-80% subscription is Prepaid.

Many Individuals are rejected for Postpaid by Operators themselves on grounds of 'Addres & Credit Verification'.

But here its not just about money.. but also convenience & other necessities why ppl choose PostP over PreP.

Like accounting issues, CUG availibilty, R-R Onnet Tariffs etc. these pros/cons are already being discussed in some other Topic.

Anyways, where-ever especially i have advocated Postpaid, its mainly with reference to Corporates/mid-high income ppl & their convenience cum sometimes necessity to go for it.

i don't think this is the only Forum supporting PostPaid.

[pasumark 51]

99% of the consumers are not fools; only on this forum I see people advocating post paid over prepaid, nowhere else; they are not ready to accept the rationale which is driving 90%+ of our public; I fully subscribe to this view of going prepaid... It is the truth of today's time and age which we must accept...

It is not entirely reliable to go with masses/public perception when it comes to telecom spending habbits.

As you know, majority of the ppl are in the lower income bracket.. do they have much choice?

So there itself your 75-80% subscription is Prepaid.

Many Individuals are rejected for Postpaid by Operators themselves on grounds of 'Addres & Credit Verification'.

But here its not just about money.. but also convenience & other necessities why ppl choose PostP over PreP.

Like accounting issues, CUG availibilty, R-R Onnet Tariffs etc. these pros/cons are already being discussed in some other Topic.

Anyways, where-ever especially i have advocated Postpaid, its mainly with reference to Corporates/mid-high income ppl & their convenience cum sometimes necessity to go for it.

i don't think this is the only Forum supporting PostPaid.

I 100% agree with the above views. I use post-paid for the following reasons

1. Convenient. No need to remember recharge date and recharge it
   
2. CUG - 100% free calls within my group with no additional charge
   
3. Call conference- a must for our company, we use it a lot
   
4. Super plan-Platinum 225 which is ideal for me since I call lots of local mobile which is only 30p
   
5. Super customer service-Extra care since corporate customer
   

The above reasons suit me, so I am in and will be in post paid only. Depending upon individual requirement pre-paid may be cheaper for many but never convenient.

Edited February 12, 2009 by pasumark

[manishag 17]

there could be 99% addition in prepaid because t in Prepaid all operators do fake activations at the month end. they can't do it in postpaid because there they have to provide proper documents and verification.

[dkaile 1,051]

We cannot be elitist in our views; A true democracy calls for market forces to function in such a way as to provide the best value of any product or services; that's what a market driven economy is all about; this forum too should reflect the views of the people, by the people and for the people, not only of a select few; even if we are corporates, we have a corporate responsibility to force the service provider so as to provide best value at the best possible quality of service. And that people should have a CHOICE; thats the true essence of any democratic setup; whether it is a low end, middle end or a high end subscriber, does not make any difference; so from what I gather from the subject of this topic, THE PEOPLE HAVE CHOSEN...

Edited February 12, 2009 by dkaile

[kshah 452]

Some how at tme RIMweb members are getting offended or too insisting for no reason what so ever. Main essence of discussion board lies in knowing different view point and use them for own benefit. Prepaid or post paid is individual choice but at the same time my they are strictly personal. However there my be larger group following one view point than other, but that does not mean that either of them is the ONLY TRUTH.

[Himanshu Singh 19]

I dont think remembering dates for recharging with STVs remains a big issue after the introduction of LifetimeJaadu pack. Its a lesser expensive way of doing away with having to remember the dates for cost cutters.

[dkaile 1,051]

@kshah

It is not a matter of getting offended or insisting for no reason, at all... On the contrary this kind of debate if discussed in the true spirit of discussion is good to put forth a point of view. There are other topics where we can be to the point and objective, but some topics deserve more debate. And thats what forums are all about. If you are passionate about how you feel, there's no harm in putting it in words, and from both sides. And maybe we can force the policy makers to see our point of view and change how we perceive things outta be. Thats the whole object of this debate, I hope... And if Gandhiji had not been persisting with his non-violence policy, we may never have achieved freedom, though I think his ideals have lost grip in today's day and age, and this topic does not deserve the same passion, but what the heck, why not...

[hritik123 4]

yes , taking post paid or pre paid is a matter of choice of convenience to the customer , it just seems majority find pre paid the right choice baby !!!

[KumaarShah 143]

One man's poison is another man's food. So why fight over it? If you like prepaid, go for it. If you like postpaid, go for it.

Everyone has their own calculations, but a vast majority of the 99% or whatever the ET/ToI has reported are from the lower strata of life who do not have money with them always and hence for them, they can exercise better control if they opt for prepaid rather than postpaid.

I agree with kalpak that there are merits on postpaid but I also agree with dkaile that prepaid is the most VFM. Not that kalpak is not agreeing with this point. He also has said that upto a billing of Rs 750, prepaid is better. Beyond that it makes immense sense to opt for postpaid. As far is RCOM is concerned, they offer more benefits in postpaid and not in prepaid. Once again this is debatable.

So lets just post our views and let the reader decide what to buy. We should not impose our views on anyone.

Anyway, folks enjoy the Valentine week-end.....

[faizone 15]

Connection-wise.. 99% is prepaid..

Revenue-wise.. ????????????

Point to think... aint i right!!??

[hritik123 4]

Nowadays the options in Prepaid are also increasing day by day which makes prepaid flexible unlike old times with lot of extra packs