Mobile recharges are the latest victim of the lockdown, down by 35%

Mobile recharges are the latest victim of the lockdown, down by 35%
  • With over 130 crore Indians in lockdown, telecom companies could have benefited as mobile data usage was expected to increase.
  • However, as the lockdown forced recharge vendors to shut down, over 66% users who depend on them were unable to recharge their mobile numbers.
  • Additionally, the number of new mobile users also fell drastically, further dampening the mood in the telecom sector.
As a majority of Indians work from home, the telecom sector was poised for a comeback as everyone expected data consumption to go up. While that did happen, the sector also lost out on a large chunk of business - as prepaid recharges from physical outlets went down.

In the last one month, recharges were down by 35%, according to an Economic Times report. This is a big blow to the sector as it was touted to be one the few that was poised to gain as the entire world has shuttered down due to Coronavirus pandemic.

“Telecom companies which are already bearing the brunt of the AGR (aggregate gross revenues) tussle should see some relaxations and should expect to see an improvement considering there is a surge demand in data and internet-dependent media,” Rajosik Banerjee, Partner and Head – financial risk management, KPMG in India told Business Insider India.

Why did the recharges fail?

While online recharges are common amongst the educated middle class, a large chunk which is a part of the mobile ecosystem is away from banking and purchasing online. More than 66% of India still depends on offline recharges, according to an Economic Times report. With the lockdown forcing recharge vendors to shut shop, millions of users who rely on these shops are unable to recharge their mobile numbers.

As a temporary relief measure, Vodafone Idea and Airtel have extended the incoming calls validity of nearly 200 million subscribers from low income groups and those who don’t have smartphones.

Apart from this, telcos also partnered with leading banks to allow users to recharge their mobile numbers at any of the 1,10,000 ATMs in India.

While this should help users who know which recharge they want, a bulk of Indians who could have used the extra freetime to use social media and streaming extensively, is a lost opportunity. Like in the case of basic needs, the supply and distribution chain has been broken for the telecom sector - in spite of increase in innate demand.

Massive decline in new mobile connections due to lockdown

While the telecom sector has been allowed to function during the lockdown, retail offices have been shut down. Due to this, there has been a massive decline in the number of new subscriber additions in March as well.

The report also notes that telecom operators have been able to add only 5,00,000 new users during March. This is down from the 2.5-3 million users who are added per month on an average.

To address this issue, Vodafone Idea is reportedly working on a new digital customer acquisition process. This will allow users to take a new mobile connection from their homes. However, since the process is still under development and regulatory approvals take time, Vodafone Idea and other telcos will continue to suffer until the lockdown is lifted.

See also:
Here is a list of bank ATMs that allow you to recharge your Jio, Airtel, and Vodafone numbers
A new research report says Vodafone Idea has to increase tariff by 39% to survive – and that will be a bounty for Reliance Jio and Airtel
Over 450 million users stuck in a limbo as Vodafone Idea, BSNL and MTNL fight to survive