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Business – Reliance Communications mulls joining per-second brigade

Last month, RCOM joined the ongoing mobile tariff war by announcing its 50 paise a minute plan, “Simply Reliance” . Experts tracking the telecom sector say in a market where the average revenue per user is already among the lowest, such tariff pressures will impact profitability.

“Per second billing is the most you can break down the call rates—there’s nothing much you can do beyond that,” said a financial analyst tracking telecom firms. He requested anonymity because he is not authorised to speak to the media.

RCOM, which has around 84.11 million mobile subscribers, reported a 51% drop in its net profit to Rs 740 crore for the quarter ended September. While addressing financial investors in a conference call, RCOM executives said the company is open to “per second billing” , but would rather focus on offering its existing plans.

“Per-second billing is another option we have evaluated internally. We are keeping all our other options open as well,” said Reliance ADA Group MD Satish Seth. RCOM also said its ‘Simply Reliance’ plan is the best when compared to the per second tariff plans offered by rivals.

The Simply Reliance plan allows subscribers to make a call at 50 paise per minute from any Reliance phone to any phone in India —across fixed line, CDMA, GSM, Pre-paid and post-paid plans. The rate applies to all roaming calls, at any hour of the day.

Lower and attractive tariff plans are helping phone firms such as Tata Teleservices gain market share. In August, Tata Teleservices added 3.4 million new subscribers , ahead of Bharti Airtel and other rivals. New telecom entrants Etisalat, Swan, Aircel and Telenor-Unitech are under pressure to respond with more lucrative tariff plans in order to compete better with incumbent phone firms.

As the competition in the telecom industry intensifies due to the entry of new operators, RCOM believes there will be a consolidation within the next two years.

Each telco is competing with the other by reducing tariffs and coming up with attractive billing plans. “The overhang of these developments will accelerate the process of industry consolidation in the next 18-24 months,” said Mr Seth.

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November 3, 2009 - Posted by | Uncategorized |

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