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General News Tariffs likely to drop 25-30 per cent over the next year as price war intensifies
Tariffs likely to drop 25-30 per cent over the next year as price war intensifies: Experts

MUMBAI: The mobile phone bill that has become lighter on the pocket over the past year is set to fall further, thanks to the continuing price war in the telecom industry.

Analysts and industry insiders are predicting a 25-30 per cent average fall in tariffs over the next year. If you are a heavy consumer of data, your gains could be more.

Over the past year, prices have fallen 25-32 per cent on average and 60-70 per cent for heavy data users, after Reliance Jio Infocomm entered the market with a free launch offer and ultra-cheap tariffs after the initial months.

To counter the newcomer and stop their customers from migrating to Jio, rivals, including the big three of Indian telecom — Bharti Airtel, Vodafone India and Idea Cellular — cut prices, pushing the industry into an intense price war.

The war for market share is weakening the finances of an industry sitting on a mountain of debt, but is unlikely to end soon. Rajan Mathews, the director-general of industry body Cellular Operators Association of India, expects the bloodbath to continue for at least another year.

“This will further increase stress levels of the telecom industry,” he said, urging the government to take steps to avoid the industry from getting into bigger problems such as payment defaults. But, for the consumer, competition getting bitter is good news.

The average monthly spending on mobile bills has come down 25-28 per cent in a year to Rs 240-280 in 2017, said Hemant Joshi, a partner at Deloitte Haskins & Sells LLP.

Due to new business models and aggressive tariff war, the monthly bills are expected to fall by another 30 per cent in the next year, he said. KPMG, another of the Big Four consulting companies, expects a double-digit drop in prices, on top of a 30-32 per cent fall it has factored in on the monthly bills in the past year.

While mobile services have become cheaper, companies are offering bundled voice and data packages to hold customers. Some of the popular packages come with price tags of Rs 250 to Rs 500 and validity ranging from 28 days to 84 days. Subscribers who use more than 8 GB of data a day fall in the heavy data user category and they are the highest gainers, said analysts.

For them, the average data price per GB has dropped to Rs 50 a month from Rs 250 in 2016. Cheaper data is pushing up consumption — to around 1.3 billion GB in March 2017 from 200 million GB in June 2016 — reducing the impact on the companies’ financial performance.

Counterpoint Research said while the fall in monthly bills of prepaid customers was 22 per cent, it was about 10-15 per cent for postpaid subscribers. The price war has severely hit the financials of incumbent telcos.

For the fiscal first quarter ended June, Bharti Airtel’s net profit slumped 75 per cent to the lowest level in four-anda-half years, while Idea posted its third quarterly net loss in succession. Vodafone India posted a near 8.3 per cent drop in service revenue for the same period.

“We are hoping that the sector stabilises and bill drop stops, else it will mean greater losses for us,” said a senior executive at one of the operators.

Airtel Digital HD Recorder / Kerala Vision Digital TV
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