With the Vodafone and Idea Cellular merger set to be completed by the end of the month, the two companies seem to be getting ready to take the competition to Airtel and Reliance Jio in the next few months. In an attempt to increase its subscriber base, the two companies seem to be offering double the incentives to retailers for every new customer, ET reports.
A Mumbai-based retailer was quoted by the website as saying, “Vodafone and Idea’s retailers have been told that for every new customer, they will get Rs 180-250, depending on the recharge plan they manage to sell. Higher the recharge amount, more the incentive.” Both Vodafone and Idea were reported to offer Rs 70-80 incentive prior to this.
With the merger complete Vodafone-Idea will have a market share of 37 percent, which consists of 408 million users. While this is highest share in the market at the moment, both telcos are said to be losing subscribers rapidly, especially Idea Cellular.
The company has been reported to lose subscribers in 21 of its 22 circles in May. While both Idea and Vodafone together have lost subscribers in 14 circles. That said, both telcos also have to reduce the number of their subscribers in six circles, in order to conform with the merger agreement of having not more than 50 percent of total subscribers.
However, the company still needs to hold on to most of its users, and hence it’s adapting to the strategy of offering a higher incentive to its distributors. Whether it will work or not still remains to be seen. Industry analysts have stated that similar strategies have been used by telcos in the past as well and believe it not be enough this time around.
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The report claims that Bharti Airtel already pays about Rs 70-100 incentive per subscriber in circles where it has a monopoly, and might further increase incentive schemes to meet Vodafone and Idea offerings. Reliance Jio, on the other hand, might also bump up its incentive by a 100 percent staying in line with its aggressive market approach. The company has been reported to offer Rs 140 on every Jio Phone 2 sale, and Rs 60 on every SIM sold.