Before the bruises of an expensive spectrum auction on company balance sheets have healed, Idea Cellular on Thursday triggered a tariff war by slashing 3G rates by 40 per cent to lure 2G users ahead of the launch of 4G services.
Idea's 3G rate, offered via SMS, is Rs 97 per gigabyte as compared with the average market rate of Rs 250/1 GB. The competitors are likely to follow suit—Vodafone is likely to slash 3G rate to Rs 150/1 GB from Rs 250 in Delhi while Bharti Airtel may lower it to Rs 158 in Mumbai.
The tariff war has increased the pressure on voice revenues of all major telecom companies who are yet to overcome the blow of an expensive spectrum auction. Telecom companies bought airwaves worth Rs 1.06 lakh crore at the auction which has to be paid in phases.
The 3G tariff war is also seen as a move to lure subscribers before the 4G services are launched. Reliance Jio and Bharti Airtel is already preparing to launch 4G services in some metros soon, which might lead to exodus of 2G and 3G customers.
Analysts frowned at Idea's offer saying the tariff cut will only add on to its financial woes. After buying airwaves worth Rs 30,000 crore at the March auction, Idea's debt burden has increased to Rs 42,000 crore taking its net debt to Ebitda ratio to 3.5, which is pretty high by any industry standard.
Slashing the data package rate could hit revenue growth as usage may not increase proportionately.
Source: http://www.btvin.com/industry/read/1203/what-an-idea-sirji--tariff-war-on-3g-before-launch-of-4g
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Any one got such nice 3G offers?
Idea's 3G rate, offered via SMS, is Rs 97 per gigabyte as compared with the average market rate of Rs 250/1 GB. The competitors are likely to follow suit—Vodafone is likely to slash 3G rate to Rs 150/1 GB from Rs 250 in Delhi while Bharti Airtel may lower it to Rs 158 in Mumbai.
The tariff war has increased the pressure on voice revenues of all major telecom companies who are yet to overcome the blow of an expensive spectrum auction. Telecom companies bought airwaves worth Rs 1.06 lakh crore at the auction which has to be paid in phases.
The 3G tariff war is also seen as a move to lure subscribers before the 4G services are launched. Reliance Jio and Bharti Airtel is already preparing to launch 4G services in some metros soon, which might lead to exodus of 2G and 3G customers.
Analysts frowned at Idea's offer saying the tariff cut will only add on to its financial woes. After buying airwaves worth Rs 30,000 crore at the March auction, Idea's debt burden has increased to Rs 42,000 crore taking its net debt to Ebitda ratio to 3.5, which is pretty high by any industry standard.
Slashing the data package rate could hit revenue growth as usage may not increase proportionately.
Source: http://www.btvin.com/industry/read/1203/what-an-idea-sirji--tariff-war-on-3g-before-launch-of-4g
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Any one got such nice 3G offers?
