Sunil Mittal sees no early end to tariff war: Happier times for customers but cos to take a hit

With the entry of Reliance Jio Infocomm, a telecom venture by Reliance Industries, in early September last year, industry experts were already warning alarm bells for the incumbent operators. After offering free services since its inception, Jio last week in an announcement decided to start charging customers beginning 1 April, 2017.

Even as the existing mobile operators heaved a sigh of relief following Jio's decision to mark an end to its free services, the data plans to be rolled out by Jio will still be far cheaper than the ones currently charged by the incumbents. This means, mobile customers will continue to enjoy cheaper tariff plans going ahead, not just from Reliance Jio but from other service providers as well, which are likely to join the race by matching the tariff.

Bharti Airtel chairman Sunil Mittal, who is currently in Barcelona (Spain) for the Mobile World Congress event, said tariff wars will continue for some more time as operators will have to match Reliance Jio's aggressive pricing.

"The tariffs they have announced are still very aggressive. So, you need to respond.You have to do more packages, you have to throw in more data," a Times of India report said quoting Sunil Mittal.


Announcing its decision to end free services to its customers on 31 March, Reliance Industries last week said its subscribers will have to choose its data tariff plans starting 1 April to enjoy seamless services at a much cheaper rate.

Currently, Jio subscribers are already enjoying free data and voice services till 31 March. In order to retain subscribers, the parent company Reliance Industries announced tariff plans, which are far lower compared to what current operators offer.

Customers can avail this at a joining fee of Rs 99 and Rs 303 monthly charges. This works out to Rs 10 per day. Also, all domestic voice calls to any network will remain free, with no roaming charges and unlimited data.

The existing subscribers who opt for Jio Prime will continue to get the Jio New Year offer benefits for one more year until 31 March 2018, Reliance Industries said last week.

Reacting to Jio's discounted tariff plan announcement, Bharti Airtel responded by making incoming calls free to its customers while roaming within the country starting 1 April.

Subscribers of India's largest telecom operator will also enjoy free SMSs, and would not be charged a premium for talking anywhere within the country, Bharti Airtel said in a press release issued to exchanges.

Further, there will be no additional data charges on national roaming, and home data packs for customers will apply even while they roam across India, the release said.

“This marks the death of national roaming and the whole country will now be like a local network for our customers, who will not have to think twice before making or receiving calls or using data while traveling outside their home base. Airtel has again set the benchmark in delivering best in class value backed by a great network experience," said Gopal Vittal, MD & CEO, Bharti Airtel.

Not just Bharti Airtel, Vodafone India, too, in October last year had made incoming calls to its network free while on roaming.

One needs to see when will Idea Cellular, the country's third largest mobile operator, unveil its new data plan, as operators need to react fast to stop customers from shifting to other mobile firms.

While mobile subscribers in the next few months will be spoilt for choice to select cheap tariff plans from various operators, telecom companies will be in for tough times going ahead as falling tariffs will further hurt their earnings.

For the third quarter ended 31 December, 2016, Idea Cellular reported a net loss of Rs 384 crore due to disruption in the mobile space following the entry of Reliance Jio.

Similarly for Bharti Airtel, the company's net profit for the third quarter saw a 54 percent drop in consolidated net profit at Rs 503.70 crore due to predatory pricing by Reliance Jio.

Further, the top three mobile operators also reported a sharp fall in their adjusted gross revenue in the last quarter, mainly due to Reliance Jio's free voice and data services, a report by The Economic Times said.

During the quarter under review, Bharti Airtel's AGR fell 8 percent on quarter to Rs 11,500 crore, while it dipped 5.1 percent for Vodafone India at Rs 8,300 crore and 4.9 percent for Idea at Rs 7,000 crore, ET said citing ICICI Securities report.

On being asked whether Jio's pricing will hurt the industry, Sunil Mittal said it is unsustainable for the industry to give 1GB per day for that price.

With changing dynamics in the country's telecom sector, customers are in for a bonanza due to unbelievably low data tariffs coming in their way, telcos are staring at tough days ahead in the wake of heightening competition.

(Disclosure: Reliance Jio is owned by Reliance Industries, who also owns Network18, the publisher of Firstpost)

Updated Date: Mar 01, 2017 12:43 PM

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