- BSNL gained customers after tariff hikes by private telcos but is now losing momentum.
- Network issues have slowed customer churn to BSNL, favoring Jio and Bharti Airtel network.
- Reduced channel payouts and affordability concerns are reshaping rural telecom dynamics.
In July 2024, private Telecom providers like Jio, Bharti Airtel, and Vodafone Idea (Vi) increased their prepaid and postpaid plan prices. This prompted many subscribers to port their numbers to BSNL, a government-owned telecom operator. BSNL’s unchanged tariffs and affordable plans attracted users, especially from rural and lower-income segments.
Initially, this shift significantly benefited BSNL, with the operator reportedly gaining nearly 30 lakh subscribers. Meanwhile, competitors like Jio, Bharti Airtel network, and Vi lost a combined total of over 27 lakh users during the same period. However, this trend has begun to wane as users face network quality issues, leading some to port back to private operators.
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BSNL Challenges in Network Quality
A recent report by IIFL Securities highlighted that while BSNL gained initial traction, its growth momentum has slowed due to persistent network issues. Retailers in rural areas, particularly in Maharashtra’s Vidarbha region, observed customers switching back to Jio and Bharti Airtel network after experiencing connectivity problems with BSNL.
For instance, BSNL’s popular Rs 199 plan, which offers 2GB of daily data for 28 days, was a cost-effective alternative to Jio’s Rs 349 and Bharti Airtel’s Rs 379 plans. However, the competitive pricing failed to compensate for the dissatisfaction caused by subpar network performance.
Reduced Channel Payouts
Another factor affecting BSNL’s customer retention is the declining channel payouts for retailers. As per the IIFL report, commissions for port-ins have decreased from Rs 300 to Rs 200-210, provided retailers secure over 50 port-ins. BSNL also offers the lowest commissions compared to Jio and Bharti Airtel, further dissuading retailers from recommending the operator to customers.
Spending Challenges Amid Tariff Hikes
Affordability remains a pressing issue. Many rural subscribers already find the Rs 299 plan for 28 days burdensome, and any further tariff hikes could strain their spending capacity. The report warns that such increases might lead to reduced spending on other essentials, affecting overall rural consumption.
Insights from IIFL Survey
The IIFL Securities survey conducted across small towns and villages in Maharashtra’s Vidarbha region revealed significant findings:
- Initial Trends: Many subscribers switched to BSNL following the July tariff hike, primarily from lower-income groups.
- Current Scenario: The churn to BSNL has slowed considerably, with users now preferring Jio and Bharti Airtel for better network quality.
- Retailer Feedback: Retailers noted that customers from rural areas value connectivity over cost, prompting them to reconsider BSNL as their provider.
BSNL’s initial success after the July tariff hikes has been hampered by network quality issues and reduced retailer incentives. While the operator managed to attract a substantial number of subscribers in a short span, retaining them remains a challenge. Customers seeking affordability continue to turn to BSNL, but those prioritizing network reliability are moving back to Jio and Bharti Airtel network. BSNL must address these concerns to sustain its growth in the competitive telecom sector.
Also Read: BSNL 4G Expansion 50,700+ Towers Installed, 41,950+ Operational, and Strong Financial Growth
FAQ
Why did BSNL gain customers after the July tariff hikes?
BSNL’s affordable plans, like the Rs 199 recharge, attracted users from private operators who raised prices.
What challenges is BSNL facing with its network?
Many customers report connectivity issues, leading some to switch back to Jio or Bharti Airtel.
How have retailer commissions impacted BSNL’s growth?
Reduced payouts for port-ins and low commissions compared to private telcos discourage retailers from promoting BSNL.
What does the IIFL report suggest about BSNL’s future?
The report indicates that BSNL needs to improve network quality and retailer incentives to sustain its subscriber base.
Will further tariff hikes affect BSNL’s customer retention?
Further price increases could strain rural customers’ budgets, potentially impacting their spending on telecom services.
