RCom’s move of introducing the simplest All India Voice tariff was no surprise to us. This rapid rebasing in pricing by an incumbent (as announced on Monday) will seriously affect and threaten smaller, regional and startup operators, perhaps shortening the period before which industry consolidation inevitably takes place.
Price cuts and promotions are not new in Indian wireless – what is new is
that one of the three wireless incumbents has done it: This marks a major shift in industry dynamic and is fundamentally different from a smaller, unprofitable player resorting to price cuts (which we had anticipated earlier).
The response from incumbents may be focused on on-net calls to prevent the existing subscriber base to move away to the competition. New tariff announcements would disrupt industry pricing discipline, reducing ARPM estimates.
MoU elasticity: unlikely to play out in near term, due to supply- and demand-side constrain. Despite sharp cuts in tariffs that are likely to be announced by key sector players over the course of next week, we see little possibility of MoU elasticity in the market.
This rapid rebasing in pricing by an incumbent will seriously affect and threaten smaller, regional and startup operators, perhaps shortening the period before which industry consolidation inevitably takes place.
