Will Vodafone join Airtel, Idea's price war?
A price war has ensued amongst Airtel and Idea Cellular, and all fingers point to the impending threat from Reliance Jio's launch.
The catalyst was Jio's recent claim of already having over 15 lakh customers in its beta stage.
In quick succession, both Airtel and Idea Cellular recently cut their data charges to stay competitive. First Idea cut its data charges by 45% for its light internet users (below 1GB) and Airtel soon followed it up with a 67% increase in data for the same fees on some of its pre-paid recharge packs. Idea, not willing to fall behind, matched this with a similar 67% benefit for its customers.
Bharti Airtel’s revised data benefits includes the Rs 655 4G /3G monthly recharge pack which will now offer 5GB data versus 3GB earlier. TheRs 455 pack that earlier offered 3G/4G data with a cap of 2GB will now offer 3GB of data at the same tariff, an increase by 54%.
Meanwhile Idea Cellular's plan revision includes 10GB 4G/ 3G data packs at Rs 990. Idea's 2GB data has been priced at Rs 349 compared to the earlier Rs 449. The 5GB 3G, 4G pack is now priced at Rs 649, offering a 67% jump in value that the earlier pack.
Will Vodafone jump into the fray?
Vodafone is expected to follow suit soon, Rohit Chordia and Abhas Gupta of Kotak Institutional Equities said in a recent research report.
The Mukesh Ambani-backed Reliance Jio is already the talk of the town before its launch. With a non-commercial 'soft launch' in December last year, Jio rolled out its services exclusively to its employees, later expanding it to their family and friends on an invite-only basis. Now, you can avail of all its services by buying the company's Lyf mobile.
Apart from that, Reliance Jio is widening its reach even before formally launching the service. Jio's services were recently extended to Samsung Redmi Note 3 users, and those Lyf mobile users who were not given a three-month preview to its servces at the time of buying the handset.
To break into the market, Jio is expected to offer high-speed data at a very low price or may bundle free voice calls to attract users in the world's second-largest smartphone market, a PTI report said recently.
Kotak Institutional Equities says, given the data benefits, the net impact of each brand will depend on the customers' reaction. For non- 3G/ 4G users, promotion by adopting more affordable trial packs would be a clear positive.
Among those using about 0.5 – 1.5 GB per month, a sizable proportion of customers adopting the now-more-value-for-money 3-10 GB packs, is critical for this bold move to yield the desired data volume and revenue growth uplift.
Heavy users (2 GB – 10 GB) - can save money by using same-for-less or can trade up.
"Competitive pricing and disruption happened in voice market a few years ago. We are seeing a sequel to that now, in data. There is expectation of disruption in the data space resulting in competitive pricing," Deloitte Haskins & Sells LLP, Partner, Hemant Joshi said on Gadget 360.