Source: News Bharati English02 Sep 2016 10:34:41
Mumbai, September 2: The price wars strikes the telecom space again, Industry analysts predict Bharati Airtel, Vodafone and Idea Cellular to slash their rates to respond to the alluring tariff rates that Reliance Jio Infocomm is offering.
Industry executives expect Relaince Jio Infocomm to disrupt the market with cheap prices and its pan-India network. This may force the incumbents to announce tariff cuts over a next few weeks to ring fence maximum customers in a market that is highly price sensitive. The response is expected to depend on the kind of lift Jio will have in terms of gaining subscribers. A Target set by Ambani is of signing up a 100 million subscribers in the shortest time span.
"The battle lines have now been clearly drawn. You have Jio with Reliance Communications, Aircel and MTS on one side and Bharti, Vodafone and Idea Cellular on the other," said Rajan Mathews, the director general of GSM industry body Cellular Operators Association of India.
Cuts in data prices after the Jio launch have been announced. Such competition is good for consumers, but not for an industry that is sitting on about Rs 35,000 crore of debt. As the burden is likely to pile up further, a price war will affect the recovery the industry has been witnessing.
“Jio's launch has been one of the key worries we have had for the last couple of years, and this is turning out to be quite negative. We continue to stay cautious," says Credit Suisse."Immediate reaction is to carefully study the kind of impact Jio will have and respond as fast as we can, but we don't want to jump the gun," a senior executive said. The quality of service and data speeds is good at this point of time but longterm impact would depend on Jio's ability to sustain it. The current tariffs are likely to best attract extremely price-sensitive customers.
While the executives at incumbent operators sounded cautious, Airtel issued a statement welcoming Jio's formal entry into the sector and said it would surely fulfill all of its regulatory obligations. The company subtly responded to a remark made by Ambani at the Reliance AGM in the morning, where he said the legal obligation was on the incumbent operators for providing interconnect to Jio.