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RCom joins rivals, offers per second billing plan

RCom joins rivals, offers per second billing plan
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First Published: Tue, Nov 03 2009. 11 37 PM IST
Updated: Tue, Nov 03 2009. 11 37 PM IST
Mumbai: India’s second-largest mobile-phone company by subscribers, Reliance Communications Ltd., or RCom, on Tuesday announced a one-paisa-per-second billing plan for short duration callers, a billing scheme that some of its rivals have already adopted.
On 5 October, the company had cut all call charges to a flat 50 paise a minute under its “Simply Reliance” plan to counter the growing popularity of per-second billing that was first launched by Tata Docomo, a brand of Tata Teleservices Ltd. Since then, Bharti Airtel Ltd., Vodafone, Idea Cellular Ltd., Aircel Ltd., and Loop Mobile have all offered a per-second billing option. Under the plan, a user pays per second instead of a full-minute billing unit.
The telecom operator said in a statement that it would charge Re1 for 3 minutes call rate for long duration callers and retained its Simply Reliance scheme that charges 50 paise a minute, for standard call duration users.
“Any scheme that is being offered by everyone else will have to be replicated by the remaining operators as well. Per-second billing is the new flavour in the sector,” said Nishna Biyani, an analyst with Mumbai-based brokerage Prabhudas Lilladher Pvt Ltd. He added that with “initial milking” of the scheme by Tata Docomo – it added 8-9 million subscribers in three months soon after this plan was launched – and others, there was little left for RCom now.
Shares of RCom, an Anil Ambani-promoted company with 92 million subscribers, dropped 5.71% to Rs165.90 on Tuesday on the Bombay Stock Exchange, the first day that markets were open after the weekend. On Saturday, RCom reported a 52% drop in profits. The bellwether index Sensex fell 3.09% to 15,404.94 points.
In an analyst conference call on Monday, RCom’s group managing director Satish Seth had said that such a move (per-second billing) was being considered but had remained non-committal.
Prabhudas Lilladher’s Biyani added that total revenues are bound to fall but that it is difficult to guess exactly how much as it is not known what percentage of total calls are less than a minute long. If this category is very large, the fall will be more, and vice versa, he said.
The world’s second largest mobile phone services market after China, India currently has 11 mobile operators and has added an average of 14 million users per month this year.
Reuters contributed to this story.
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First Published: Tue, Nov 03 2009. 11 37 PM IST