Covid-19 effect: 35% slump in mobile recharge volumes
By MYBRANDBOOK
Due to the 11 days nationwide lockdown to curb Covid-19, the overall mobile recharge volumes has seen a 35% slump as millions of migrant workers among the worst affected forming the bulk, as per industry experts and analysts.
The lockdown has affected half of India’s over 370 million feature phone user base which majorly comprised of migrant workers who have not been able to recharge their phones. The basic phone user base also includes some 85-90 million Reliance Jio 4G VoLTE phone users, according to market trackers.
More than 90% of the 1.15 billion mobile phone subscribers in India are pre-paid subscribers. Aimed at helping those migrant workers who have not or won’t be able to recharge during the 21-day lockdown to April 14, telcos such as Airtel and Vodafone Idea have extended the validity of plans to April 17.
As per industry executives and experts, the physical recharges have droped to nil as people are not being able to visit mobile stores or their nearest kiranas to recharge phones, a development which sharply lowered monthly new user additions of telcos. And pure digital recharges, reckoned to make up a shade over a third of overall mobile recharges, are also down.
A senior industry executive estimates that the inability of about 50% of India’s feature phone users to recharge could lead to “around Rs 15 crore revenue loss for the Big three telcos during the current lockdown period as these migrant workers recharge small amounts”.
Analysts, though, don’t expect the sharp fall in mobile recharges to sting Bharti Airtel, Reliance Jio and Vodafone Idea’s revenues in the fiscal fourth quarter of FY20 as the lockdown started in the fourth week of March. They also expect the combination of higher data usage and the December 2019 tariff hikes to offset any revenue dip in the March quarter. But that, they said, would change if the lockdown is extended.
“If the lockdown continues beyond April 14, it will hit revenues of Airtel, VIL and Jio (sequentially) in the June quarter, though we don’t have estimates immediately,” said Rajiv Sharma, Research Head at SBICap Securities.
Sharma said Jio’s potential revenue hit in the June quarter may be comparatively less as its around 90 million feature phone users have 4G, and majority would be able to switch to online digital recharges faster than Airtel/VIL’s 2G users if the lockdown is extended.
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