It is well known fact that after Bharti airtel took the lead to bell the cat and suffered a higher churn out, no telco wants to be seen aggressively raising tariffs.
Now the focus of all operators focus is on revenue market share and subscriber net additions. An operator can increase revenue market share by raising tariffs, but in doing so may lose subscriber additions, thus has to strike a fair balance between the two. It is for this reason that Bharti may have achieved lower revenue growth than its peers. Other operators were less vocal than Bharti about implementing new tariffs in our view. The immediate challenge for Bharti would be to manage subscribers’
perception.
Varying Tariff Strategy Across Circles
Tariff strategies differ from operator to operator, and from market to market, because no single operator is dominant in all 23 circles of coverage. For example, Idea may be keen to implement tariff hikes in Maharashtra where it is the market leader, but may be focused on churning subscribers from competition in Orissa where it only has a 3% share and thus may not hike tariffs in Orissa. Bharti has the largest overall market presence and thus has the least overall incentive to cut tariffs.
How to Sustain Tariff Hike with Minute Growth ?
One of the challenges with implementing tariff hikes is the possibility that it will undermine minute growth. After announcing tariff hikes, operators started pushing special value vouchers aggressively to maintain minute growth. Special value vouchers are not necessarily “value destructive”. So far, they have been used to drive network utilization in selected pockets or boost
demand.
To Conclude, focus on market share gains, combined with a lack of consensus action among operators to raise tariffs, has created a vicious circle of tariff competition. What Say ?
