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TMCNet:  Airtel increases 2G data rates, Vodafone, Idea expected to follow [Telecom] [Times of India]

[January 10, 2013]

Airtel increases 2G data rates, Vodafone, Idea expected to follow [Telecom] [Times of India]

(Times of India Via Acquire Media NewsEdge) KOLKATA: India's biggest mobile phone company by revenue and customers, Bharti Airtel, has increased 2G data rates late last week, and its closest rivals, Vodafone and Idea Cellular, are expected to do the same as cash-strapped telcos are pulling out all the stops to cover costs and improve margins.


The Sunil Mittal-promoted company, that has been cutting down on freebies to its customers, has increased the price of its 1GB 2G data plan by 25%, and Airtel 2G customers will now have to pay Rs 125 for 1GB of data, which was Rs 100 earlier.

Bharti Airtel said the latest revision is subject to "rate elasticity, customer demand and supporting cost structures", echoing its chief executive (India & South Asia) Sanjay Kapoor's recent assertion that both pricing of voice and non-voice services will need to move up for the telecom industry to remain sustainable, invest in future technologies and generate returns for its shareholders.

Airtel, however, did not reply to ET's specific query on whether it would also raise call tariffs and high-end data prices (3G) in the weeks ahead. The present increase in 2G data rates is restricted to only the 1GB plan, which is by far the most expensive among the six 2G data plan variants.

Vodafone and Idea, which have made inroads into Airtel's dominance in the mobile turf, are also expected to increase select 2G data plans this week. "We are aware of some of our competitors increasing tariffs for 2G data recently. We see this as an encouraging step for industry and are taking corrective measures accordingly at our end," said a Vodafone India spokesman, without divulging the details.

Vodafone India executives acknowledge that the 2G data market has boomed although it is yet to catch on in rural India where there is lack exposure to data plans. Idea Cellular did not reply to ET's email but industry executives, aware of the development, said the company is planning to increase its 2G data rates following Airtel's move.

The CEO of one of India's biggest mobile phone companies claimed that 2G data constitutes roughly 3-4% of operators' revenues. Accordingly, analysts believe the 2G data business possibly generated close to Rs 577 crore for Airtel during the quarter ended September 2012 as its total India revenues for the period stood at Rs 14,419 crore.

By that logic, the 2G data business is reckoned to have garnered nearly Rs 700 crore for Vodafone India during the first six months ended September 2012, given that Vodafone India's service revenues during that period stood at Rs 17,418.9 crore.

Using the same yardstick, 2G data operations possibly contributed about Rs 212 crore to Idea during the three months ended September 2012 when its total revenues stood at Rs 5,314 crore. Neither Airtel, Vodafone nor Idea agreed to reveal the share of 2G data to their respective revenues.

Telecom analysts at Ovum believe the latest revision in 2G data tariffs is not surprising at all. "The mobile phone companies have already hit rock bottom and further decreases were simply unsustainable. 2G data is booming relative to 3G, largely due to the prevailing low tariffs but also the large pool of feature phones out there. This will change over time as entry-level smartphones start getting traction," said Ovum's principal telecoms analyst Shiv Putcha, who, however, does not see 3G data rates rising in the near term.

"I don't expect increases in 3G data rates in the near term although this will largely depend on what happens with LTE pricing once Reliance comes online," said Putcha, adding that 3G data revenues were slowly overtaking 2G data revenues in major cities for players like Airtel and Vodafone although 2G still dominates the country's data revenue scene.

(c) 2013 Bennett, Coleman & Company Limited

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