In Telecom War Between Reliance Jio And Others, Tariffs Not Seen Coming Down Further

The Indian telecom industry is going through a major shake-up ever since billionaire Mukesh Ambani-controlled Reliance Jio made its entry in September last year, offering free internet and voice calls. Jio's move disrupted the industry and forced incumbent telecom operators like Bharti Airtel, Idea Cellular, Vodafone, Reliance Communications and BSNL to slash their existing tariffs on internet and voice calls. Incumbent telecom operators started announcing attractive calling plans and lucrative data packs to counter additional competition triggered by Jio's aggressive entry in the market, according to analysts. But can the tariffs come down further? Some analysts say no.

Reliance Jio offered its customers free voice calls and internet to acquire subscribers, making it the fastest ramp-up by any mobile network operator anywhere in the world. Reliance Industries' telecom arm crossed 100 million subscribers on February 22, 2017, as per the Reliance Jio website.

The industry also saw a consolidation wherein Vodafone India and Idea Cellular agreed to merge their operations and Bharti Airtel went into agreement to acquire Telenor's Indian operations.

Free voice calls and internet by Reliance Jio will expire on March 31, but the company has come up with a 'Prime' membership for its customers. They can subscribe to the Prime plan at a one-time fee of Rs 99 and can use 10 GB of internet data, free voice calls and SMS for Rs 303 per month. (Also read: 'Around 84% Jio users willing to take Prime offer')

Meanwhile, industry experts say that the tariffs are not likely to remain low going ahead.

Prashant Singhal, telecommunications leader at EY, told NDTV Profit, "Data rates are downward of 20 cents a GB which is lowest data tariff globally and do not see a further aggression on tariffs to go down and this tariff is good enough for a subscriber to come in and experience data."

"For first time in the last two decades, telecom sector is showing negative growth in terms of revenues I would think that further reduction in tariffs would not be justifiable from return on investment (ROI) perspective," Mr Singhal added.