RCom joins mobile tariff war; offers all calls at 50 paisa/min
October 5, 2009
Reliance Communications Ltd (RCom), India's largest GSM and CDMA mobile services provider, is the latest operator to join the tariff plan war started by Tata Teleservices Ltd. RCom, the Anil Dhirubhai Ambani (ADA) group company said it will roll out its new "Simply Reliance Plan" that offers all local, national long distance (STD) and roaming calls at 50 paisa per minute for lifetime.
The plan to be rolled out on RCom's GSM and CDMA network from Tuesday will be offered to both its post-paid and prepaid subscribers, the company said in a release.
Anil Ambani, chairman, ADA group, in a release said, "In another game changing move, Reliance brings a billion Indians closer to each other, with one single rate for all local and STD calls, to any mobile or landline network, anytime, anywhere in India, without any conditions or restrictions."
To avail the new plan, existing prepaid subscribers of RCom have to buy a onetime special tariff voucher of Rs48, while post-paid subscribers will have to pay a monthly subscription fee of Rs99, the company said.
During the second quarter to end-September the EBITDA margins in telecom sector are expected to fall about 117 basis points year on year mainly on the back of higher network expansion costs and a secular decline in tariffs or revenues per minute, due to the ever-increasing competitive intensity in the sector.
Following Tata DoCoMo's "pay per second" and "pay per call" tariff plans, last month, Bharti Airtel, India's largest telecom operator, launched a new tariff plan to offer local and national long distance calls at 50 paisa per minute, with some additional monthly charges.
"Even as we expect robust growth in the Indian mobile subscriber base, given a more challenging business environment, a significant increase in competitive intensity, a further fall in tariffs and ARPUs, slowing subscriber growth, margin pressures and ever-present regulatory risks, we believe that the chances of a major valuation re-rating in the sector are remote," said Angel Broking in a report.
The wireless industry is set to witness a flurry of new entrants or network expansion by existing smaller players, resulting in 12-14 players in each circle from 5-6 at present. With the backing of experienced global and regional players and about $6 billion of initial funding committed by them, the new entrants appear well-poised for their initial rollout plans. Also, these players will have a shorter time to market and lower capacity expansion needs due to a predominantly shared infrastructure model.
However, average revenue per user (ARPU) of incremental subscribers—given that growth would now come from the 'lower rungs of the economic pyramid'—is likely to be at a steep discount to the industry average, said IDFC-SSKI Securities Ltd, in a report. -Yogesh Sapkale[email protected]