Reliance Prepaid Plan Evokes Good Response

[Arun 795]

The Hindu Business Line - Mumbai , Sept. 25

Some of the defaulting customers' unpaid bills were partly or fully waived to persuade them to shift to prepaid services.

AROUND two million of the roughly eight million Reliance IndiaMobile postpaid wireless customers have moved to prepaid services since the launch of the company's new tariff package on August 15, according to sources in the company.

This constitutes a 25 per cent shift to prepaid from the company's postpaid segment, which would come as a relief to Reliance IndiaMobile officials, who are keen to weed out several defaulting customers accumulated over the last year.

The company's August 15 package, which started a new round of the tariff war among wireless operators, was partly designed to shift a significant portion of Reliance IndiaMobile's low-billing or defaulting customers to the prepaid segment.

Some of the defaulting customers' unpaid bills were partly or fully waived to persuade them to shift to prepaid services, said sources. Some defaulting customers were even told that they had the choice of moving to prepaid services or having their phones disconnected. This way, the customers were provided an incentive to shift to the prepaid category. From the point of view of Reliance Infocomm, defaulting customers or low-billing customers were weeded out of the risky post-paid category but were still retained with the company. Often customers chose to retain their numbers and shift to prepaid services, said sources. One reason is that some individuals would rather not change their numbers. The other reason is that the Reliance CDMA handset, like most CDMA handsets, has been designed for Reliance Infocomm's operations.

The prepaid-postpaid mix of new customers with the company has begun to follow the pattern of the more mature GSM market, with around 80 per cent of the new subscribers being in the postpaid category, said Reliance Infocomm sources.

Reliance Infocomm had provisioned for bad debts amounting to 16 per cent of revenues for 2003-2004 and does not want the pattern to continue, said officials. The company provisioned Rs 436 crore for bad debts, while service revenues for the year amounted to Rs 2,707 crore. The company attributed its bad debts to the `Monsoon Hungama' offer of last year, which fetched one million applications within the first 10 days of its launch.