At the beginning of this quarter, Reliance Communications took a daredevil step from the incumbent pack and introduced the Simple Reliance Tariffs forcing others to have a re-look at their Tariff plans and thus began a full fledged Mobile Tariff War. I then told that Simple Reliance is a great tariff plan and their was scope for more innovative tariff structures. To satiate my judgment, I ran a small survey on this blog for over 2 weeks and broadly 128 voters think like I did 🙂
- 50% approved that Simple Reliance is their favorite plan
- 23% are hoping to see new unlimited talk time plans at fixed monthly rental – which was one of my suggestions then. [Here is the screenshot of the final verdict]
Here is what various Telecom Operators think of Multi SIM, which is prevalent to an extent as high as 20 – 25% in the market today and going forward how that can be tackled. The idea of subscribers holding multiple SIMs will remain a reality, till the time price or tariff arbitrage remains in the market. This arbitrage can either be in the form of free minutes or in terms of lower tariffs. However, we expect the industry to move towards tariff parity and thus expect free or discounted promotional minutes to remain the primary reason for multiple SIMs.
From here, downside in tariff [blended ARPM] appears to be limited but scope for re-structured innovative plans – Unlimited, etc is possible. However, Drop in Interconnect Usage Charges can be the trigger for next round. Incumbents, with stronger brand and a large subscriber base, might be able to maintain a tariff premium of ~10% over the industry average. Every tariff fall implies a greater EBITDA loss for new players [Higher CAPEX due to 1800 MHz spectrum], and will pre-empt the consolidation.
Disclaimer: I have negligible positions in RCom and Bharti