Telecom battle intensifying, floor tariffs may be preferred: Report

Bharti Airtel is not following Vodafone Idea's recent postpaid tariff hikes, the report said

Bharti Airtel, which has been gaining subscribers and increasing revenue marketshare, is not following Vodafone Idea's recent postpaid tariff hikes, as they are limited and in select plans, according to a report.

Amid intensifying marketshare battle, sector floor tariffs will be preferred, CLSA said in its report.

"Bharti Airtel is not following Vodafone Idea's recent postpaid tariff hikes, as they are limited and in select plans. Also, Bharti Airtel has been gaining subscribers and increasing revenue market share," it said.

It further noted that Vodafone Idea's postpaid tariff hikes were "selective".

Vodafone Idea, Bharti Airtel's key competitor in postpaid services, has raised tariffs by 7-9 per cent in two plans and, for now, in one of the 22 circles in India, CLSA observed.

"Vodafone Idea postpaid tariffs are now 7 per cent higher versus Bharti Airtel and about 60 per cent higher versus Reliance Jio in comparable data plans," the report further said.

Meanwhile, in prepaid data tariffs, Vodafone Idea is offering additional data or rollovers in select plans to cut subscriber churn.

While the India mobile market currently has forbearance (rates are market-determined) on tariffs, the regulator has done extensive work on floor tariffs. And, the industry awaits a decision by the new chairman of the Telecom Regulatory Authority of India (Trai) on the positive sector turn, CLSA said.

"Trai's challenges in floor tariffs will likely include operators' wide variations in data costs, divergent views on data floor rates, bundled plans, and requests for forbearance on voice calls on 2G/3G networks but voice services on 4G networks (voice over long-term evolution, or VoLTE) to have a floor price," it said.

These issues could cause floor tariff delays, in which case Vodafone Idea, which is staring at a financial crisis, may be compelled into prepaid tariff hikes in 3-6 months, CLSA pointed out.