Online Prepaid Recharge Patterns - India

Preface:
The following report analyses the avg. spending pattern on mobile talk-time by users of various
operators and circles. A brief analysis of payment method used to make these transactions is also
included.
1. The Data is from 100,000 transactions done on Freecharge.in between Sept. 1st 2010 to Oct
17th 2010.

2. The Data covers 10 telecom operators (including MVNO), viz. Aircel, BSNL, Docomo, Loop
Mobile, Idea, Reliance, S-Tel, Tata Indicom, Virgin, Vodafone. Amongst the major Operators,
the report does not cover Airtel and MTNL.

3. The payment methods available for the users were Credit Cards (Master and Visa Only), Debit
Cards (7 Indian banks and all Visa Electron cards) and Net Banking (36 Indian Banks).

Key take-away:
1. Vodafone users spend the highest on prepaid talk-times at around 15% more than the overall avg. of
Rs.128.

2. Aircel customers spent the least at around 21% lower than over all avg.

3. Karnataka is the highest spending circle – around 16% more than the avg.

4. Avg. ticket size on credit card transactions is 34% higher than Netbanking transactions and 83%
higher than Debit card transactions.

5. SBI customers prefer using debit cards for online transactions whereas ICICI customers use their
Netbanking account.

About Freecharge.in
Freecharge is an ecommerce service that offers mobile recharge of all major Indian operators.
Freecharge makes the service a little special by offering discount coupons of nationally renowned retail
brands for free along with the recharge. Say if you recharge for Rs.100 you will also get coupons worth
Rs.100 of your favorite brands for free.

Freecharge is in its 3rd month of service is already seeing over 3000 transaction everyday. Its 50,000+
fans strong active Facebook community is a proof of the popularity that it has gained in so small time.

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1. Overall Operator-wise Ticket size comparison
The avg. recharge amount has seen a big
variation with Vodafone users’ spending
almost 50% more than Aircel users. The
overall avg. ticket size was Rs.128.

2. Operator & circle-wise ticket size comparison

Vodafone subscribers were the highest
spenders across all 3 major circles.

3. Circle-wise ticket size

comparison
Delhi subscribers are spending about
8% less than their counterparts in
Karnataka.

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Payment Method Volume Share
Debit cards were the most preferred payment method for the transactions made. A notable reason for
this is the target group focus of the site was students and freshly employed people who use their ATM
cum Debit cards online for a transaction. Clearly the Debit card users are low spending users with an
avg. ticket size of Rs.96.3. The avg. ticket size for transaction made through credit card is almost 83%
higher than Debit card users.

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5. Payment method & its bank share
On comparing the various banks for the payments the avg. ticket size did not fluctuate noticeably
within the same payment type. Though there were clearly leaders in each payment type.
Amongst credit card transactions Visa was a leader
with almost 2/3rd transactions being paid through a
Visa card.

Debit cards were the most popular mode of

payment and SBI was the clear leader with around
half of the transactions being processed by SBI
Debit cards. PNB was a distant second processing
about 14% of the total transactions. Remarkably,
ICICI users were not very active in using their Debit
cards.

Netbanking is very popular amongst the ICICI

customers, with almost 1/3rd of the netbanking
transactions coming from ICICI users. SBI is a close
second with 25% of the total netabnking
transactions.

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PREPAID RECHARGE

• Fastest growing Industry in India .

• Total Industry Size ismore than 1 lac crore .

• One of the Largest Employer in India .

• Pre Paid segment is more than 80% of the Telecom Industry .

• Vast Emerging Market .

• Vehicle for economic transformation in rural areas .

• One of the fastest growing company in Pre paid recharge

• Pioneer in technology to integrate all telecom companies recharge on one single

mobile phone

• In House software development with latest technologies

• Trying to provide a solution for the problems faced by the telecom industry

PROBLEMS OF TODAY’S
DISTRIBUTORS

• It requires a huge entry cost to start a recharge business .

• It involves a lot of hassels in this industry when retailer has to keep different set for
each and every telecom operator.

• Inventory Cost is huge.

• Retailers are harrased and forced by the distributors to sell new sims in lieu of
providing the Flexi recharge load to them.

• It takes a lot of time for retailer to deal with so many agents coming on regular basis
from all telecom companies.

• There is no proper service to the small retailers by the distributors.

• There is no proper service to the retailers based in villages and towns .

• Problems in accounts and maintaining a log for all seperate service providers and
seperate handsets.

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SOLUTIONS PROVIDED BY
TOP RECHARGE

 Ease of Operation .

 No need to maintain too many handsets , with different chargers.

 Single inventory for all the services.

 Easy to deal with only one distributor .

 Ability to provide recharge through web also.

 No Need to maintain different accounts , all logs are available through sms and web .

 DTH companies recharge also available on single mobile phone.

 Dedicated customer care center to provide solution for all problems.

 Huge savings in handsets and inventory.

 Further integration of upcoming companies.

PROJECTION OF PROFIT FOR DISTRIBUTORS

 SECURITY DEPOSIT (REFUNDABLE) BY DISTRIBUTOR = RS 5 LACS

 KITS PROVIDED TO THE DISTRIBUTOR INITIALLY= 1000

(REST ON DEMAND)

 ACTIVATION FEES FROM RETAILER = 0

 DAILY SERVICE CHARGES FROM RETAILERS = RS 3/ DAY.

MINIMUM GUARANTEED INCOME EVERY MONTH = Rs 25000

PROFIT CALCULATION
MARGIN ON LOAD FOR DISTRIBUTOR = 0.5%

MONTH TOTAL DISTRIBUT RECHARGE TOTAL TOTAL

KITS ORS OF 1000 EARNING EARNING /
MARGIN RETAILERS ON MONTH
FROM @ OF RS RECHARGE ( SERVICE
SERVICE 1000/DAY @0.5% CHARGES
CHARGES +LOAD )
@50%

FIRST 300 13,500 90 lac 45,000 58,500

MONTH /month

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SECOND 600 ( 300 27,000 180 lac 90,000 1,17,000
MONTH New) /month

THIRD 1000 ( 400 45,000 300 lac 1.50 lacs 1.95 lacs
MONTH New) /month

COMPARISON OF INVESTMENT AND EARNING BETWEEN NORMAL RECHARGE BUSSINESS

AND TOP RECHARGE

 NORMAL RECHARGE BUSSINESS

INVESTMENT HANDSET LOAD

Airtel 1500 2000

BSNL 1500 2000

VODAFONE 1500 2000

IDEA 1500 2000

TATA 1500 2000

Relaince 1500 2000

Tata docomo 1500 2000

Ping 1500 2000

aircel 1500 2000

DTH

Videaocon 1500 5000

Tata Sky 1500 5000

Dish TV 1500 5000

Sun Direct 1500 5000

Big Tv 1500 5000

ITZ cards 5000

TOTAL 21000 48000

GRAND TOTAL 69000

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TOP RECHARG

INVESTMENT—

KIT 0

HANDSET 1500

LOAD 5000

TOTAL 6500

SAVING –

INVESTMENT IN NORMEL RECHARGE BUSS. – INVESTMENT IN TOP RECHARGE

= 69000- 6500

EARNING= AVERAGE 2.5% / DAY(RETAILER)

INVESTMENT = 6500 RS

RETAILER’s EARNINGS

LOAD RS RS RS RS RS RS
PER DAY 1000 2000 3000 4000 5000 1000
0

EARNING RS RS RS RS RS RS
PER DAY 25 50 75 100 125 250

EARNING RS RS RS RS RS RS
PER 750 1500 2250 3000 3750 7500
MONTH

INTEREST RS RS RS RS RS RS
ON 1200 1200 1200 1200 1200 1200
SAVING
OF Rs
60000

TOTAL RS RS RS RS RS RS
EARNING 1950 2700 3450 4200 4950 8700

1. You need to register with a dealer:

This is absolutely free. What it entails is for you to be known to the
dealer either by name or by other means of identification. They will
have your email address and you will have installed their software on
your computer. Payments for PINS (vouchers are sold as PINS to the

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sub-dealers who need to print them) will be made to the company’s
account number and accompanied by a text message stating how
much PIN you want.
Example: send me MTN 100 (100 PINS), I have paid to your account.
VCI nig ltd, umoh.moses@yahoo.com.
Note that its important you call the dealers to confirm if they have on
ground what you intend to buy before going ahead to make payment
into their account.
2. You need a computer with or without internet connection.
3. You will need a printer which can be either colored or black and
white
4. A flash drive (USB) is also required. This is especially needed if
you are not having personal internet connection. In other words, you
need to go to cyber-cafes to copy the encrypted PINS from your email
box.
5. You will need pre-printed Papers: Dealers will give you samples
upon request. You can then give it to any printer to make copes for
you. Plain papers can also be used. The most important thing is to
have clear prints.
Bulk order is very important in this business the minimum order
placement you can make is 100 units of any voucher denomination
you want. Dealers sell PINS in 100s.
6. Internet connection is required as PINS ordered for will only be
sent through the internet. That is by email. If you have personal
internet connection that is cool! If you do not, it still ok just that you
will have to be visiting cyber-cafes occasionally to copy your PINS.
An important point to note here is that you must avoid downloading
your PINS unto the computer at the café. Download into your flash
disk and transfer to your business computer. This is to guide against
theft by anyone. Also ensure that your email password is very secure.
If you don’t have an email address, ask a family relative that you trust
or friend show you how to create one today.
Recharge vouchers transactions are mainly routed through emails
except in the case of a principal dealer that provides you other
equipment such as orange box.
Therefore, you need to open a valid e-mail for your business if you
are not having one before. Recharge vouchers to be sold to you as a
dealer, is sent in an encrypted form called PINS.
They are usually encoded by your principal dealer for security
purpose. You will be given a password to decode it after
downloading.
You must register online with your principal dealer in order to facilitate
easy and reliable trading with him’. This would enable them create a
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record on their database for your business transactions.

1 India’s telecom market is experiencing

explosive growth– Crossed 217 mn subs by Oct 07 with
net adds of nearly 8 mn subs / month over last 4 months
2 – Despite continued record growth over last 12 months,
only 23% of 1.1 bn population owns a phone
3 – There are 6-7 telcos operating in each of 23 license areas. Airtel,
Reliance, Vodafone & BSNL, who are “the Big 4” have 74% market share
4 – Growth is expected to continue and even accelerate,
reaching a projected 496 mn mobile subs by 2010

5 • Near term outlook shows a continuing focus on acquiring

new low end customers– Improved regulatory structure has lead to
increased competition, and operators aggressively tailoring strategies to
acquire customers across all segments by making mobile services more
affordable and increasing coverage
6 – Prepaid users comprise over 85% of total subs and over 95% of net
new additions, further adding to the impact of tariffs on falling ARPU
7 – Almost half of Indian mobile subs use low cost handsets and this is
expected to increase further with new additions
8 – Further innovation in entry-level handsets
and call tariffs will continue to drive growth
9 – Operators will need to look at alternative
revenue streams like VAS as they mature

10 • Traditional VAS has been primarily SMS-

based, with Bollywood and Cricket the largest
content drivers– VAS services contribute approx 7%
of total wireless telecom revenues for Indian operators
11 – Total market size of VAS was USD 678 mn in 2006,
projected to touch USD 926 mn at the end of 2007
12 – Most VAS services are provided over SMS, IVR and WAP. Revenue
growth has been driven by SMS (including P2P, A2P, P2A), contributing over
55% of total VAS revenues in 2006
13 – Bollywood & cricket remain the killer content, whether for SMS
alerts, ringtones / CRBT, games, wallpapers, etc.

rechargeit.now provide service to 22 operators

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