Bharti Airtel’s managing director of India and South Asia, Gopal Vittal, said that the entry of Reliance Jio, Mukesh Ambani’s telecom venture, could shake up the Indian telecom market, and has the potential to kick-off a tariff war.
“We have seen brutal tariff wars over the last 20 years. Today our tariffs are 33-34 paise on voice per minute, which I think is unsustainable. A new entrant coming in with a lot more capacity surely there could be pressure on tariffs,” Vittal was quoted as saying by the Economic Times.
However, Vittal expects Jio to compete with a more rational pricing strategy, given that the Mukesh Ambani Company seeks returns for its shareholders and investments.
Vittal however made it clear that Airtel would focus on holding on to its ARPUs (average revenue per user) in case Jio brings low data and voice tariffs to garner quick market share.
“One strategy could be to throw in a lot more goodies, as we have the capacity (free bandwidth) but still try and maintain the ARPU. Realisation will go down because people will consume more data without headline tariffs coming down. So, the decisive factor is then an operator's capacity. We have to play our game….We are ready. We are battle-scarred and battle-ready,” he said.
Reliance Jio has recently extended the trial launch of its 4G services to the public through an invite system, driven by its group employees.
The 4G operator recently revealed that its services were being tested by over 500,000 users, many of whom use LYF phones. The telco had said that it will launch full scale commercial operations once the base increases to a few million users, which his widely estimated to be towards the end of this year.
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