The Hindu Business Line : Bharti sets off new price war on mobile turf

New Delhi, April 28 Taking the tariff wars in the telecom sector to the next level, Bharti Airtel on Monday announced a 43 per cent reduction in STD rates for its 62 million mobile subscribers across the country.

Airtel subscribers will be able to make domestic long distance calls at a flat rate of Rs 1.50 a minute compared to Rs 2.65 a minute at present. The new Airtel rates are, however, still expensive compared to STD rates of fixed line telephones, which is at Re 1 a minute.

The company has also reduced roaming rates from Rs 1.75 a minute to Re 1. The new rate will be effective from April 30 across all tariff plans.

In response, rival operator Reliance Communication said that it will offer free STD calls for only Reliance-to-Reliance calls on two specific tariff plans. Tata Teleservices has a tariff plan that allows STD calls at 50 paise a minute across the Northern region. However, Airtel’s offer is for all mobile calls irrespective of the distance, tariff plan, region or who you are calling. State-owned BSNL said that it may announce revised tariffs after a closer look at Airtel’s new offer.

Mr Sanjay Kapoor, President, Mobile Services, Bharti Airtel, said that Airtel may be taking a hit on the revenue in the short-term which it hopes would be made up due to surge in traffic volume. “It would be difficult for rival mobile operators to match this tariff, especially those without their own long distance network. Bharti, being an integrated telecom company, rides on its own network to provide STD services to mobile subscribers,” he said.

Among Bharti’s competitors only RCom, Tata Teleservices and BSNL have their own long distance network. Other mobile companies such as Vodafone and Spice route their traffic through others’ NLD network, which adds to their cost.

Explaining the rationale for the tariff cut, Mr Kapoor said, “With 70 per cent STD customers in India using less than 5 minutes per month on STD calls and 80 per cent mobile customers not using their phones while roaming, we have a compelling customer proposition. I am confident that this will drive growth and usage in the Indian telecom industry.”

Airtel subscribers talk an average of 507 minutes a month primarily driven by cheap local call tariffs. The cut in STD rates is aimed at increasing the usage given that the average revenue per user has been declining over the past year.

The recent abolition of access deficit charges has also reduced the burden on the operators, which may have triggered a fresh round of tariff cut in the long distance segment.