Mobile Phone Bills Likely To Drop 25-30% As Price War Intensifies Between Network Providers

Vamshi Krishna

The Smartphones had become one of the important parts of our bodies, isn’t it?

We use them for calling, messaging, video calls, chatting, Internet browsing, apps, games, etc. What not, we can do anything with our smartphones. For this, we spend lots and lots of money to avail all these features such as talk time, Internet bill and much more.

Here’s a good news for the people who use mobiles for many purposes. The mobile phone bill that has become lighter on the pocket over the past year is set to fall further, thanks to the continuing price war in the telecom industry.

mobile bills to reduce

Telecom tariffs are likely to drop further by 25% – 30% over the next year and the market is expected to further move towards lower pricing as per the reports. Quoting telecom experts, they said that telecom users can expect a double-digit drop in prices owing to the advent of new “business models” that have shaped up amidst the “aggressive tariff war” since last year.

Over the past year, prices have fallen 25-32 per cent on average and 60-70 per cent for heavy data users, after Reliance Jio Infocomm entered the market with a free launch offer and ultra-cheap tariffs after the initial months.

Last week, media reports said that the Telecom Regulatory Authority of India (TRAI) might cut Interconnection Usage Charges (IUC) to 10 paise per minute as against 14 paise per minute for wireless to wireless local and national long distance calls. TRAI has sought review from various stakeholders regarding this in a consultation paper.

To counter the newcomer and stop their customers from migrating to Jio, rivals, including the big three of Indian telecom Bharti Airtel, Vodafone India, and Idea Cellular cut prices, pushing the industry into an intense price war. The war for market share is weakening the finances of an industry sitting on a mountain of debt but is unlikely to end soon.

The Economic Survey report said Jio’s pricing scheme “forced incumbent telecom firms” to cut voice call rates and cost of 1 GB data to average USD 1.9 during January-March 2017. “Stiff competition, price war, reduced revenue have trapped telecom sector into highly leveraged with interest coverage ratio turning less than 1 since the third quarter of 2016-17,” the survey said.

Rajan Mathews, the director-general of industry body Cellular Operators Association of India, expects the battle to continue for at least another year. “This will further increase stress levels of the telecom industry,” he said, urging the government to take steps to avoid the industry from getting into bigger problems such as payment defaults.

While mobile services have become cheaper, companies are offering bundled voice and data packages to hold customers. Some of the popular packages come with price tags of Rs 250 to Rs 500 and validity ranging from 28 days to 84 days. Subscribers who use more than 8 GB of data a day fall in the heavy data user category and they are the highest gainers, said analysts.

For them, the average data price per GB has dropped to Rs 50 a month from Rs 250 in 2016. Cheaper data is pushing up consumption to around 1.3 billion GB in March 2017 from 200 million GB in June 2016 reducing the impact on the companies’ financial performance.

Counterpoint Research said while the fall in monthly bills of prepaid customers was 22 per cent, it was about 10%-15% of postpaid subscribers. The price war has severely hit the financials of incumbent telcos.

“The industry will continue to bleed under this pricing, and there is the risk of cascading impact on the banks, government (accruals from license fee and spectrum payments made by telcos), and equipment manufacturers,” COAI director general Rajan Mathews had told.

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