RCom executives say that while the goal is to get a large subscriber base, they do not think the company would be ARPU-negative and that the business model is not unsustainable.
They point out that the company would make some money from calls that terminate on its network (at the same rate that it will pay other networks). Secondly, they expect all their consumers to buy recharge coupons and use their phones beyond the 10 calls that are free.
Thirdly, the incentives given by other competitors to retailers for a new connection are as high as Rs 150-200 while RCom's trade margins are far lower.
"The trends have shown that 85 per cent of calls from a phone are made to just five numbers, so once they know a new number they will also call back and we expect termination charges on incoming to neutralise what we spend on outgoing calls to other networks," says a senior executive of RCom.
He adds that the company has been able to pass on the lower trade margins and the zero cost on advertising to consumers as low entry packs.
Also read: Gadgets to watch out for in 2009
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