The Hindu Business Line : Mobile operators use lifetime cards to hook users

New Delhi, Feb. 4 With as many as five new cellular operators set to enter the market, existing service providers are betting big on lifetime pre-paid cards to keep subscribers hooked on their network – literally for a lifetime.

Taking the battle in this pre-paid mobile segment a few notches higher, Reliance Communications has lowered the cost of lifetime validity cards to Rs 199. The cheapest lifetime pre-paid mobile card available in the market at present costs Rs 495. The Reliance offer means that a subscriber can now continue to get free incoming calls by paying just Rs 199 and by recharging at least once in 6 months.

Reliance’s move comes after Bharti Airtel and other GSM operators had lowered the tariff for lifetime pre-paid card users to Re 1 per minute for all local calls.

Mr P. Shukla, President, Personal Business, Reliance Communications, told Business Line, “This makes Reliance’s lifetime plan the cheapest one in the market. As a side effect, this will help us in retaining our subscribers.” Sources in the GSM camp said that other operators would respond with a similar cut.

More than 70 per cent of the 200 million mobile subscribers use pre-paid cards and they tend to change operators. Lifetime validity cards were launched just over a year ago by all the mobile operators in a bid to arrest the high churn rate, which was around 6 per cent. But at Rs 999 it was still an expensive proposition for those at whom the card was targeted.

The cost was reduced to Rs 495 in the later half of 2006 and according to the telecom regulator it has become popular with the low-end telecom consumers such as carpenters, plumbers and the local grocery storekeepers who use the mobile phones more for receiving incoming calls.

As an additional benefit for their loyalty, operators allow lifetime card users to get almost the full value of the recharge coupons. Non lifetime pre-paid card users have to pay a processing fee, which could be as much as Rs 100 on a Rs 300 recharge voucher. The churn rate has now dropped to around 4 per cent for most mobile operators.