Ahead of Reliance Jio’s full-scale entry into the mobile services arena, Idea Cellular on Monday joined price war with Bharti Airtel in cutting data tariffs to stem customer flight.
While Airtel had on Sunday announced plans to offer prepaid customers as much as 67 percent more data for the same fees, Idea Cellular Monday announced joining the price war with a matching reduction.
“Idea Cellular has now slashed the rates of its 4G, 3G BIG Internet packs by up to 67 percent, providing more value to heavy Internet users who consume data packs of 2GB to 10GB,” Idea said in a statement.
Earlier last week, Idea had announced the price reduction by 45 percent for light Internet users (below 1GB).
Billionaire Mukesh Ambani’s Reliance may launch high-speed data and 4G voice services as early as August. Reliance Jio is already offering services for a limited number of users on a trial basis, integrating spectrum and testing the network.
Jio, which has 1.5 million customers in its beta tests, may offer high-speed data at very low price or may bundle free voice calls to lure users in the world’s second-largest smartphone market.
While the company initially offered 4G SIM cards bundled with its Lyf smartphones, priced at as low as Rs. 2,999, Jio is offering services with Samsung phones and may expand it to include iPhones in near future.
Jio is offering 90 days of free unlimited 4G mobile Internet and voice calling in the SIM cards.
Airtel stock slipped 4 percent to close at Rs. 363.45 on BSE, while Idea shares declined 6.5 percent to close at Rs. 103.90. Reliance Industries’ fell 0.82 percent to close at Rs. 1,004.25.
“Idea is now offering 10GB 4G, 3G data pack for just Rs. 990. Idea’s 2GB data is now priced at just Rs. 349, as against the earlier price of Rs. 449. Idea users will now get 5GB of 4G, 3G data at just Rs. 649 – a 67 percent more value than 3GB data earlier,” Idea said in the statement.
Idea said that the reduced tariff for prepaid users have gone live across all Idea 4G and 3G provider circles, and postpaid rollout is underway.
Ambani had in March stated that Jio would offer mobile broadband speeds that are 40 to 80 times faster than current average speeds. Jio’s network, he had said, was been designed to provide 10 gigabytes of monthly data for every user.
“While the price reduction in our sachet data packs was aimed at inducting more users into the world of Internet, the reduction in rates of BIG Recharge packs now, is aimed at delivering significantly higher Value for Money to our regular Internet users,” Idea Cellular Chief Marketing Officer Sashi Shankar said.
Idea has also launched new Freedom Packs, which are low-cost data packs starting at just Rs. 35 with four weeks’ validity, the statement said.
“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.
Asked if he anticipated more rounds of data war in the run up to Jio’s commercial launch, Joshi said: “The amount and quantum of benefits will be calibrated with the situation on ground…as things unfold different players will react differently.”
While data benefits announced by Airtel and Idea are more or less similar (both are offering similar amount of bonus data to customers), Airtel’s monthly pack is priced marginally higher than Idea.
Commenting on data pricing war that is playing out in the market, Prashant Singhal, global leader for telecom practice at EY said: “It has to do with economies of scale…as more and more data penetration takes place, rates have to come down.”
The latest move by telecom operators with regard to data pricing combined with drop in handset prices will drive affordability for customers, he added.
On Sunday, Bharti Airtel increased benefits on select prepaid data recharge packs and sachet packs by offering up to 25-67 percent more data at the same price. The company said the move would enable customers to stay online longer and download more of their favourite content, thereby enriching mobile Internet experience.
In 4G/3G new monthly pack, Airtel is packing-in 40-67 percent more data. In the Sachet Packs category, the company is offering 32-48 percent more data for the same price.
Meanwhile, Airtel has also announced enhancement of 4G capacity in Bangalore. It is the only company at present that operates 4G services in 2 spectrum bands – 1800MHz and 2300MHz.
Players like Airtel and Idea have upped the ante in mobile data pricing ahead of the upcoming commercial launch by Reliance Jio.
The company recently said it has over 1.5 million test users on its network although it did not specify a launch date for its commercial operations.
Reliance Jio, which is gearing up to launch its 4G services, had also said that during the recently-concluded quarter, it extended its trial services to all Lyf devices users under the Jio Lyf Preview Offer.
This, it said, has enabled testing of all the services to customers outside the initial set of test users, and added that the feedback has been encouraging.
While Airtel has loaded extra data in the current scheme without any specific condition, Idea in a statement later in the day said that its existing plans that now come packed with “more data” at no additional cost is a “promotional offer” on its 4G and 3G packs.