4G Price War: It's Reliance Jio Vs. The Others

by Wrik Sen    Jul 19, 2016

jio

As Reliance gets ready to launch the Jio 4G services, the telecom price war has already begun two months ahead of the event. Other Indian private players like Airtel and Idea Cellular have slashed prices and increased the benefits of up to 67 per cent on the existing price plans. While many expect Reliance to be a low-cost option for consumers, the price war has started due to that reason, and hence companies are looking to provide more benefits on currently priced plans which effectively makes it more cost effective for consumers. While Airtel is offering 67 per cent more benefits, Ideal is looking at 45 per cent more benefits. 

As some sources quoted in the business standard, analysts had predicted a fall of 15-20 per cent in prices when Reliance Jio 4G makes an entry into the market. Also, the reactions in the market are happening courtesy of the fact that Jio had announced having 1.5 million test-users under its purview, whose monthly data consumption is in excess of 26GB and voice usage of 355 minutes. To counter these numbers, Airtel has managed to get in higher better benefits; INR 655 3G/4G monthly pack will now allow users upto 5GB of data use, as compared to the 3GB earlier. The INR 455 pack will now offer 50 per cent more, with 3GB of data allowed, instead of the earlier 2GB. The INR 989 pack for 3G/4G will now offer 10GB of data, as compared to the earlier 6.5 GB. 

Also read: India To Have 90 Mn 4G Subscribers By 2018 

On the other hand, Idea Cellular has followed suit by adding on the benefits for users using packs within INR 8 to INR 225. The 2G data pack, earlier giving in 75 MB for 3 days, will now give 110 MB for 3-days, which is a 45 per cent increase in benefits. Similarly, the 3G/4G data pack for INR 22, which earlier allowed for 65 MB data for 3 days, will give 90MB for the same time period. Also, 10GB data at INR 990 and 5GB at just INR 649 are the latest offers, as are the Freedom packs at INR 35/month. Their list of latest rates applicable as follows: 

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These moves are being looked at keeping the average revenue per user at a stable level, while looking at getting a strong hold on the user base. It is no wonder that instead of decreasing the price of overall plans, the telcos are trying to add more-for-the-buck for the average consumer. According to Rohan Dhamija of consulting firm Analysys Mason, “This is a pre-emptive move by telsickliness as the new entrant looks to launch services in coming months.” In a way, the other players in the market are trying to take a guess as to what the new entrant in the market might do, but focus would be on headline revenue or the average revenue per user, which Gopal Vittal, the CEO of Bharti Airtel for India and South Asia, also shares as his view on the issue. 

Also read: 4G Users In India To Reach 15mn In 2015: PwC 

However, what will make the difference is the bundling offer which some fear Reliance might provide. It would mean, free voice services but bundled with value for money 4G data plans, which just might disrupt the short-term market positions of many telcos. But what Reliance Jio actually ends up doing is bound to be more easy on the pocket for a lot of consumers, and would inherently have a market disruption plan up its sleeves.