| RCom may unveil per second billing, intensifying price war | |
| Press Trust of India / New Delhi November 02, 2009, 20:10 IST | |
Reliance Communications (RCom) is likely to join the per second tariff war engaged in by rival mobile operators to grab more subscribers.
"Per second billing is another option that we have evaluated internally. While ‘Simply Reliance’ is delivering positive traction for us at present, we are keeping all our options open," Satish Seth, group managing director at Reliance Communications told analysts in a conference call today.
As an aggressive pricing strategy, Tata DOCOMO, a joint venture of Tata Teleservices and Japan’s NTT DOCOMO, had first launched the per second billing in June. Airtel, Vodafone, Idea, Aircel and BSNL have since then followed suit.
Seth said the launch of services many operators over the past few months across the country will lead to consolidation in the next two years.
"This has led to heightened competitive activity and build-up of over-supply in the industry leading to significant tariff rationalization. We believe that in the near term such competitive activity will only increase and the overhang of these developments over the next few quarters will accelerate the process of industry consolidation in the next 18-24 months," Seth added.
Call rates in India have dropped to less than 50 paise per minute and more tariff plans for rural customers are being planned which could squeeze profit margins of companies, feel analysts.
India, which has 11 mobile operators, adds 10 million users a month. And there is scope for grabbing more users as the tele-density is still less, the analysts say.
RCom saw its net profit drop by 52 per cent to Rs 740.30 crore on a consolidated basis for the second quarter ended September 30, 2009.
Seth said during the second quarter, margins have been impacted primarily on account of increased network and operational costs following our nationwide GSM roll-out, intense competitive activity in the market place, build up of excess capacity and aggressive nationwide tariff restructuring in the industry.
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