Raising tariffs difficult for telecom operators as Reliance Jio enters market


Companies may find it difficult to raise tariffs in the near term to pass on higher spectrum costs as Reliance Jio would prefer to keep data rates lower. The balance sheets of the incumbent telecom operators Bharti Airtel, Vodafone and Idea Cellular appear, at least at first sight, to be weighed down by the burden of debt after the latest round of auctions for airwaves. Worse, these companies may find it difficult to raise tariffs in the near term to pass on higher spectrum costs as Reliance Jio, a new entrant, would prefer to keep voice and data rates lower to grow its own subscriber base swiftly. But, this doesn’t necessarily mean a change in the pecking order of the Indian telecom sector in favour of Reliance Jio any time soon.

There are at least three reasons for this. For one, amassing a critical mass of subscriber at the expense of well-established incumbents will not be easy and if history is anything to go by, cutting tariffs will not help much. Read more

Source: http://economictimes.indiatimes.com/

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Categorised in: Sector News, Telecom

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