Bharti Airtel’s management dismissed any threat from Reliance Mobile’s GSM Tariff war which includes Free minutes and Low Lifetime Pre-Paid validity cards. Significant number of questions in the Analyst call were related to the tariff war which was downplayed collectively by Akhil Gupta, Manoj Kohli and Sanjay Kapoor.
Mr. Sanjay Kapoor President, Mobile Services at Bharti Airtel said,
We will not have a knee jerk reaction. No free minutes models are sustainable. Reliance will eventually withdraw after sometime. Airtel will remain competitive with excellent QoS. Since Reliance GSM launch in the past few weeks, we have not seen any impact nor there is any such caution to be noticed.
I am not quite sure which of the above executives said this,
Free Minutes will see huge rise in traffic. There is a section of customers who are deal seekers and who churn from operator to operator. Once freebies stop, these customers move back or settle else where. We are not worried about this.
Coinciding with elimination of FREE Minutes and distinguishing itself as a Superior Wireless Company in India, Bharti Airtel did terminate some FREE minute schemes thus seeing lesser MOUs.
Mr. Sanjay Kapoor further came down heavily on Reliance Communications,
There is a cost differential in maintaining and expanding 900 MHz and 1800 MHz networks. Reliance currently has constant revenue stream and is thus offering FREE minutes to lure customer. However, this cannot go on as the company will start eating into its own revenues [60 CDMA mobile subscribers] and is self destructive. Market seeks Big Brands. The top 2 companies had 50% of the Revenue market share. Airtel has a huge loyal subscriber base.
Additional details from the Call,
- Airtel has seen an increase of less than 1% in Spectrum charges and is awaiting more spectrum in more circles.
- Addition of new users unlikely to drive the MOU / ARPUs. What this really means is as Airtel expands in rural areas, market expected customers to rise and MOU to fall, but looks like the company now has a solid strategy to preserve it from being eroded.
- Airtel declined to comment on WiMax bidding as the policies are still unclear and also for competitive reasons. [So this makes me thinking if Airtel now wants to bid for WiMax spectrum along with 3G ?]
- International Roaming revenues have been below expectations. [We really wish Mr. Maran was still in the HotSeat of IT & Communications ministry where we could have seen a drastic fall in International Roaming Rates]
Even with the launch of Reliance Mobile GSM discounted tariffs, Airtel clearly states that there is no shift from the sweet-spot to sub-optimal, at the moment 🙂 It is really worth noticing that Reliance continues to offer FREE calling while Airtel is against it. What are you consumers for ? [Remember QoS, Customer Care etc]