Telecom operators, including Airtel, Idea and Vodafone, are gearing up for a price war to protect their mobile Internet services market share.
While Idea is already offering 45 per cent more data on existing sachet packs below 1 GB, Airtel has announced new tariff schemes that offer savings of up to 67 per cent.
According to industry experts, more pricing offers will follow in the coming weeks in anticipation of the commercial launch of services by Mukesh Ambani’s Reliance Jio.
“Boardroom discussions have been around ramping up quality of networks and offering data at lower price points. Whenever there is a new operator in the market, incumbents will go the extra mile to protect their market share,” said a top executive at a Mumbai-based operator.
At stake is the mobile Internet market, which is expected to nearly triple to $14 billion over the next two years, according to analysts.
While this is good news for the operators, the pressure on pricing may result in lower profits. The realisation per MB of data is expected to come down from about 20 paisa to less than 15 paisa.
“A similar trend was seen when new 2G operators came in 2009-10 and dropped tariffs for voice telephony to 1 paisa per second. Incumbent operators were forced to match the tariff but it hit their bottomline so hard that it took them two years to recover,” said an analyst.
For now, operators are focusing on two things — protecting their consumer base from being poached by RJio and expanding the overall market. Of the 1 billion mobile users, only about 100 million — 10 per cent — subscribe to 3G or 4G services.
“These refreshed data packs will help drive consumption and boost the uptake of mobile internet in the country. Given the deepening smartphone penetration and Airtel’s rollout of data networks across India, we believe these packs will also drive affordability and bring new users online,” said Ajai Puri, Director – Operations (India and South Asia), Bharti Airtel.
The ₹655 4G/3G monthly recharge pack from Airtel will now offer 5GB of data against 3GB earlier — an increase of 67 per cent. Similarly, the ₹455 pack 4G/3G pack now offers 50 per cent more data by increasing data to 3GB from 2GB.
The operators are also adopting the ‘sachet’ scheme to make mobile Internet affordable, a strategy that worked earlier in driving up voice calls. Idea Cellular, for example, is giving 110 MB (75 MB earlier) in a 2G data pack. Similarly, a 4G or 3G data pack of ₹22 that offered 65 MB data for three days will now have 90 MB.