RCom’s Simply Reliance Tariff which has redefined the Wireless Industry Tariff Benchmark in Inda has led to Downgrade of Indian Telecom Stocks. Here is what Analysts had to say in their report.
Vinay Jaising of Morgan Stanely wrote,
….the cheapest one for the consumer, we think the only gainer from this plan is the consumer. …. most operators will not react to totally match RCOM’s new tariff plan. However, this tariff will be a hindrance for new operators to launch services, and possibly stagnate industry revenue growth for the next 12 months.
If they don’t react they will face the music during number portability 🙂
Tim Storey from J P Morgan said,
We expect RCOM to gain subscriber market share with this plan at the expense of new operators (Aircel, Tata). Reaction from other incumbents (Bharti/Vodafone/Idea) will be key; we expect to see a tariff reduction in the next 2-3 months. The strategic reason for RCOM’s move is clear – to make it uneconomical for new telcos to operate in the Indian market.
Mr. Saluja of Kotak said,
…..profitability of all the players in the industry is bound to suffer.
Mr. Singh at Citigroup said,
Any carpet reaction by the incumbents, however, remains a risk for sector earnings.
We are already seeing the stocks down 9% in morning trade 🙂 TRAI may make it mandatory to all operators to offer per second billing according to media reports thus forcing the Fat Boys of the Indian Telecom [Airtel, Vodafone and Idea] offer diet plans to users. What say, Say what ?
Disclosure: After really long time I have bought RCom again 🙂 Integrated Telcos will make money in the long run.
Do not believe R Comm, they can withdraw the plan anytime and yes from existing customers too !
Chetan, my sense is that this is the bottoming out of the tariff war. Don’t sense another player coming in and competing on price after this. Also keep in mind that this pricing might be matched, or just about matched to avoid churn. I don’t see this as just a customer acquisition strategy, but more of a churn prevention strategy. The tariff will find a bottom, and this might be it. What will matter after this tariff is matched, is the other things – customer service, network quality and reach, etc.
Hi
I believe that the next best thing for the consumer wil be abolishion of roaming as any body can call from there home network from anywere
for little as the markets has not witnessed the telenor effect still!
ARPU’s might drop but not the earnings on leasing the tower to new operators ..
Yes i agree with iRDB, Reliance does not any consistence and sound plan. They change their plans like anything. It is difficult to rely on them.
This company will capture custumer of BSNL(completely) and airtel after launching of portablity system.i am completely against of iRDB as after this system it can’t increase tarrif
Its just decrease the RMS (Revenue Market Share)and will not capture iRMS (Incremental Revenue Market Share) for reliance but will add some SOGA or Gross Add as well as subscriber base. The Life Cycle of customer will decrease because of heavy Churn(cause of Huge Gross addition) will also affect on REC bases RPU.