Pre-paid users hit hard by retailer strike

MUMBAI: Pre-paid customers are beginning to feel the pinch of the retailers strike when they need to recharge their mobile phone cards. Customers are forced to go to company outlets, stand in long queues to get their pre-paid recharge cards, as striking retailers are not selling the recharge cards to protest against the reduction in margins by telcos.

A customer who was turned away by the retailer today had to first find the location of the company outlet. “When I reached there, I found there was a long queue for pre-paid cards. It took me half an hour to get a recharge,” she said.

Customers at the company outlet were pretty clueless about the reason for the strike. The retailers have put up boards that ask customers not to ask for recharge vouchers of three telcos, Airtel, Hutch and BPL Mobile.

Although the protest has been on for almost a month now, the retailers had restricted it to only selling new activations. Last week, they decided to stop selling recharge cards for pre-paid customers.

Earlier the protest had been restricted only to parts of Mumbai. Now the retailers have come together to form an association, called the Mobile and Telecom Retailers and Distributors Association (Mumbai).

Retailers claim that the exclusive retailers are hit hardest by the reduction in margins to 2.36% from the earlier 3.25%. “The overhead expenditure of the retailers, whose turnover is between Rs 1 lakh to Rs 5 lakh is minimum 3%,” said dealers.

About 90% of the retailers are those who are not dependent on exclusive sales of recharge cards or vouchers, said dealers. “This is because it is difficult to survive purely on sale of new activations and recharge cards alone,” they added.

Company sources, however, claim that the high volumes of business make it a viable proposition for retailers. “Earlier, we were giving higher margins, but then volumes were lower. Now, with price cuts, the volumes have gone up.

If the company is taking a cut in its margins, down the line too, others too need to reduce margins,” said officials of a leading mobile operator.