(Bloomberg) -- Billionaire Mukesh Ambani extended free services being offered by his Reliance Jio Infocomm Ltd. unit, saying the company was working to iron out voice- and data-quality problems to help lure customers from rivals.
Jio services debuted on Sept. 5 and were initially meant to be free until December. Ambani announced Thursday that, starting Dec. 4, every customer would get a full bouquet of Jio services free until March 31. The company had in September announced tariff plans of as low as 149 rupees ($2.18) a month for data and free mobile phone calls and roaming across India.
Competitors including Bharti Airtel Ltd. and Vodafone Group Plc.'s unlisted Indian unit have also cut tariffs in response by as much as 67 percent and added fourth-generation, or 4G, services in an effort to prevent customer defections. Vodafone said earlier this month that it will write down the value of its unit in India by 5 billion euros ($5.3 billion), and that it won't proceed with a long-planned initial public offering of the business until at least the end of March.
"By rekindling the tariff war, Reliance Infocomm has put the incumbents into further trouble and it will take some time for Bharti Airtel and Vodafone to recover from this battle," said Sanjiv Bhasin, executive vice president (markets and corporate affairs) at India Infoline. He said Reliance Jio is adding customers at a phenomenal pace.
The top three telecom operators in India -- Airtel, Vodafone and Idea Cellular Ltd. -- continued to gain revenue market share despite the launch of Jio's services, CLSA said in a report on Wednesday. The three control 75 percent of telecom-sector revenue as of the July-to-September quarter, an increase of 220 basis points from a year earlier, it said.
Shares of Bharti dropped 2.2 percent as of 2:47 p.m. in Mumbai on Thursday, while Idea declined 3.6 percent.
Ambani's mobile service, part of Reliance's plan to diversify from the oil and petrochemicals that comprised about 98 percent of profit last year, was undergoing testing for at least 9 months with a limited number of users before the launch was announced in September. It initially scheduled to start in December 2015.
Jio has added more than 50 million customers on its 4G network, Ambani said Thursday. Dropped calls have declined to 20 percent from 90 percent earlier, he said.
To contact the reporters on this story: Saket Sundria in Mumbai at ssundria@bloomberg.net, P R Sanjai in Mumbai at psanjai@bloomberg.net. To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Candice Zachariahs, Dave McCombs
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