IMPACT OF RATE WAR

ON INDIAN TELECOM
INDUSTRY

Submitted By :-
Utkarsh Sethi
Neeru Rawat
 Tariff’s Unleashed
• Predatory pricing unleashed by a few
wireless players heightened worries over the
adverse fallout on the companies'
bottomlines.

• According to analysists :
– Telecom shares will be under pressure for a few
quarters.
– This is what you call hyper-competition.
– This could stagnate industry revenue growth for
the next 12 months.
– This will replace all existing schemes.
 Telecom stocks tank on price war
woes
• Price war is only likely to
intensify with a number of new
players waiting in the wings.

• Telecom shares fall on tariff war.

• Likely to remain under pressure

for quite some time.

• The move could see erode

revenues of telecom companies
by up to 15 per cent.

• All join the tariff war.

 Share Price Falling
• Trai Chairman JS Sarma Share price
said that it might ask all on BSE in
operators to consider the Telecom Rs
per-second pulse a
mandatory option along 5-Oct 6-Oct %chg
with their other rate plans.
Reliance Comm 300.20 268.25 -10.64

• Comments from TRAI chief

on 'per-second-billing' Bharti Airtel 400.30 359.40 -10.22
added fuel to the fire.
Idea Cellular 70.59 64.75 -8.27

• As a result share price of MTNL 87.35 82.90 -5.09

six telecom companies slid
TTML 33.70 32.45 -3.71
3-10 percent.
 Expectations
• Tariff war seems to have
forced other players to match
or even better the offerings
announced by them.

• New entrants are expected to

launch wireless services with
competitive pricing.

• Expected to cut profitability.

• 13 percent fall in telecoms'

2010/11 earnings.

• This will bring down revenues

and future profit margins.
 Per Second Billing
• Tata DOCOMO was first to announce the per
second billing, but all others are following suit
quickly.
– Vodafone Essar in Madxhya Pradesh circle.
– Sistema Shyam Teleservices in  Delhi.
– Aircel Cellular in five circles (Orissa, Bihar, West Bengal,
Kolkata and Kerala)
– IDEA Cellular in Bihar and Jharkhand.

• New players have nothing but tariff to offer.

• These tariff interventions will get traffic from

customers but not revenue.
Till when is this tariff war going to
last?
• According to Mr. Sanjeev Aga, Chairman & CEO – IDEA
– The price bottom keeps changing. But, it is not going to
last for long. The prices have to stabilize soon or else it
may spell doom to Indian Telecom Industry.

• “My view is the prices are at rock bottom. Is there a

further cushion available for it to go down? Very little” -
Sunil Mittal.

• “Until a particular operator comes up with differentiated

service offerings or customer service, price wars will
continue.”
THANK YOU