Biggest telecom companies in India, which include Airtel, Vodafone India and Idea Cellular, will continue to fight the price war with their new counterpart, Reliance Jio. In a report, which was published by Crisil Research, it was stated that the companies will continue to fight for the top position in Indian telecom sector.
Ajay Srinivasan, Crisil Research director told ET that 2 of the top 3 telecom operators will lose on the revenues in the upcoming year and this will be done in order to get to the top position in market share. According to Srinivasan, the power of being at the top comes with a lot of struggle and lets the operator control the game from that position. He stated that the leading operator gets to decide the pricing and enjoys superior profitability. Also, there is a large chunk of postpaid subscribers who prefer the leading telecom operator for obvious reasons.
Refusing to name any of the operators, he further added that the Indian telecom market worth ₹1.5 lakh crores, will continue to see the price cuts in tariffs just to settle for a long time to come. The ongoing price war will have long lasting impact on shaping the new generation of wireless telecom users in India.
According to the report, though there has been a 5 fold increase in the amount of data consumed in last one year, there has been 60% price cut in 4G plans since the arrival of Reliance Jio. That has resulted in just 2% increase in the gross revenue for the telcos. In the coming fiscal, the average gross revenue is expected to increase in the range of 0-5%, because of the aggressive price point being set by the telcos to counter the pricing of Reliance Jio.
Just recently, Jio has launched a plan worth ₹303, which gives unlimited calling and 1GB 4G data everyday. Airtel had launched a similar plan to counter Reliance Jio where it provided unlimited calling and 1GB data for 28 days for ₹345. Idea had launched a similar offer with 500 MB data per day for ₹348.
Ajay Srinivasan also commented on the trend across the world which shows leading operators enjoying a larger amount of profit. In India as well, Bharti Airtel showed a profitability of 10%, which was more than the operators on number 2 and 3 positions which had profits in the range of 6-8%.