BackSlight relief for telecom firms, new pricing doesn’t disrupt industry
Slight relief for telecom firms, new pricing doesn’t disrupt industry
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Just two weeks ago, on 23 November, shares of Bharti Airtel Ltd closed at Rs275 on the National Stock Exchange, coming precariously close to the lows they had touched in March this year. On 12 March, when the market was at its lowest point, Bharti Airtel’s shares had closed at Rs274. For perspective, the Nifty has nearly doubled during the same period.
There seems to be some relief on that front. Telenor’s Indian arm, Uninor, has launched services in seven circles with tariff plans that may be attractive to some customers, but are certainly not disruptive as far as pricing for the industry goes. The per- minute calling rate of 29 paise seems much lower compared with the current industry average of 50 paise, but the company charges additional call set-up charges/rentals from customers to avail the lower calling rate.
Citigroup’s analysis of the firm’s plans indicates that customers would be able to save up to 25% on their telephone calls, if used well by subscribers. The savings vary depending on the billing plan chosen and the call duration. In some cases, for example when the call duration is short, Uninor’s users will end up paying more than the industry average.
The firm’s plans aren’t straightforward, considering the element of separate charges/rentals. Uninor’s attempt seems to be to differentiate and offer customers a good proposition. Thankfully for the industry, it hasn’t caused further erosion in tariffs.
This sense of relief also seems to be reflected in the share prices of Bharti and Idea, which have risen by at least 12% from their lows two weeks ago. Bharti now trades at Rs310.
Of course, the price competition story in telecom is far from over. Etisalat is still to launch, and note that Uninor has launched only in seven circles. If its strategy doesn’t work, it may well change its pricing plans for customers during its nationwide roll out.
Write to us at marktomarket@livemint.com
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