Bharti Airtel, India’s top telco, has started offering free and unlimited voice calls at lower price points as part of two packs in a bid to ring fence its higher revenue paying customers in the lead up to Reliance Jio Infocomm’s launch of commercial 4G services.Sources expect second-largest carrier, Vodafone India, to shortly match Bharti Airtel’s move, with the developments coming a few days after the two carriers as well as third ranked Idea Cellular slashed effective data rates by as much as 67%. And market watchers say these are just the initial moves by incumbents and more would follow in coming weeks.Vodafone and Idea Cellular did not reply to ET’s mails on whether they will match Airtel’s move.Airtel’s move comes a day after Reliance Industries said in its annual report that its telecom unit Jio will commercially launch its 4G services at “substantially lower” rates than rivals. Mukesh Ambani-owned Jio is widely expected to cause a massive disruption in data and voice prices, leading to another phase of blood-letting in an already competitive industry. Many expect Jio to launch its services sometime this month, offering free voice services bundled with data, priced at least 25% lower than current offerings of top rivals.Friday, Bharti Airtel has launched two new postpaid plans under its ‘myPlan Infinity’ series, offering free unlimited voice calls bundled with 1GB and 5GB of 3G/4G data respectively for post-paid customers subscribing to Rs1,199 and Rs1,599 plans. It already has similar offers for users of its Rs1,999 and Rs2,999 plans but with higher data allowances.”With ‘myPlan Infinity’ we are making voice calls free for our customers and offering them the flexibility to combine this benefit with their individual data requirements,” Ajai Puri, Director- Operations (India & South Asia) at Airtel said in a statement.Some experts forecast a short-term average revenue per user (ARPU) gains for Airtel as the prospect of free voice calls could entice some to upgrade their plans and make bigger monthly payouts. Also, the move may induce pre-paid users to move to post-paid plans, subscribers of which tend to be stickier than pre-paid ones. However, they expect headline rates to fall in the medium term under competitive pressure, hurting financials.Nitin Soni, director at rating agency Fitch, feels there could be short-term gains for Airtel, which has “tried to snatch away the novelty factor of free voice” that Jio is widely expected to offer when its launches 4G.But he expects Jio to unleash “far more aggressive `All You Can Eat plans’ that will offer a mix of voice, data and other services, which could eventually drag down prevailing data tariffs by more as 15-20% and blended revenue per user by 5-to-10% from current levels”.
An analyst at a leading global brokerage termed free voice calls “a powerful customer acquisition driver” which could expand Airtel’s postpaid base and boost blended ARPU levels from the current Rs196. Data ARPU at June end was Rs202 while voice was Rs139.
Quick back-of-the envelope calculations based on Airtel’s current 33 paise/minute voice realization indicates the company is offering a humongous 60 and 80 hours of voice usage a month on the Rs 1199 and Rs 1599 postpaid packs respectively, which is way above what even very high-end customers actually use, said the analyst. Airtel’s monthly voice usage level per customer in the April-June ’16 quarter was a modest 414 minutes, or roughly 7 hours.Some, however, feel Bharti in its bid to retain high-end customers may have revealed its cards a trifle too soon, and unwittingly given Jio an opportunity to undercut with more compelling bundled voice and data plans.”By playing the free voice call card a trifle too early, Airtel may find itself strategically in a vulnerable position, as a challenger like Jio could counter these postpaid packs by offering bucket plans combining free voice with a far bigger dollops of data and other services, especially since the data quantum on these new Airtel plans appear pretty modest,” said Sanjay Kapoor, former Airtel CEO for India.
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