Cellcos begin to follow Idea’s lead with data price increases

9 Jun 2015

India’s cellcos are looking into following in the footsteps of Idea Cellular, the nation’s third largest by subscribers, after the operator made the decision last week to increase the price of pre-paid 2G and 3G data packs in Delhi by up to 100%, the Economic Times reports. Echoing the decision, market leader Bharti Airtel has begun to move away from the price cuts introduced in late 2014 and removed discounts on mobile data packs bought online, whilst second-placed Vodafone is currently ‘evaluating its response’ to the shift in strategy of its two closest rivals. A senior Reliance Communications (RCOM) official indicated that it, too, may seek to make similar changes, noting that: ‘Pricing power is back with telecom companies, who are focusing on profitable minutes and bytes, since the days when operators could give away concessional minutes and bytes are clearly gone.’

As previously noted by CommsUpdate, Idea’s move prompted speculation that the cellco was simply the first of the nation’s providers to cave under the financial pressure of the recent spectrum auctions. Industry stakeholders had warned in the lead-up to the auction that the high reserve prices set by the government – against the recommendation of the Telecom Regulatory Authority of India (TRAI) – would lead to tariff increases and lower levels of investment in infrastructure.

Some analysts have suggested that price changes are only a temporary measure, however, claiming that the incumbent operators are trying to maximise their returns before the arrival of 4G start up Reliance Jio Infocomm (RJIL) and the accompanying price war that is anticipated to follow in the wake of the disruptive player’s launch.