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Advantage 4G: Why telecom cos are making a big deal out of it

4G is the business to be in — if you are a telecom company. With over 200 million smartphone users in India, it figures why biggies like Vodafone, Airtel ,  Idea  and Reliance Communications.

are vying to dial the 4G market which, globally, is expected to touch USD 340 billion by 2017.

To be sure, the odds are in their favour. According to CLSA, 210 million subscribers will be using 4G by March 2018.

The long-term-evolution or 4G technology is a faster upgrade on its slowpoke predecessor 3G, which has been around for nearly 6 years in India. Given faster data speeds on a 4G platform — some telecom companies claim they can offer 100 Mbps download speed and 40 Mbps upload speed — consumers on an older technology would want to switch. Telecom players have already begun tweaking their prices down.

Bharti Airtel revised rates for some its prepaid data recharge packs by up to 67 percent. Not to be outdone Idea Cellular has slashed the rates of its 4G, 3G BIG Internet packs by up to 67 percent. Others aren’t far behind.

Although voice business brings in nearly 80 percent of the telecom companies’ revenues, data is believed to drive growth in future. And 4G will be the way forward for these telecom companies to capture the market. According to a study, it is believed that business from data will grow 21 percent on an annualised basis over the next six years.

But a price war could hit revenues. Speaking to CNBC-TV18, Nitin Soni, Director, Fitch Ratings, says this (the price cut by Idea) confirms the firm’s negative outlook on the sector and expects other players including Vodafone to also follow suit as the reduction in data rates will put pressure on the revenues of the service providers.

Many experts, including Soni, expect a 15-20 percent fall in data prices going ahead. However, even as data volumes and data average revenues per user (ARPUs) have been growing, it will be difficult for these players to maintain revenue growth once data prices fall to this extent.

But telecom companies are expected to balance out the price cuts in 4G with offerings on 3G platform. Let’s not forget that the 3G spectrum which some of these companies had bought in 2010 is valid till 2030.

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