Mobile rates set to fall by 30%

Mobile subscribers are in for a bonanza as telecom tariffs are set to come down by at least 25-30 per cent by the year-end. Factors such as a fall in the availability of international bandwidth, entry of new licencees and mobile virtual network operators, and the move to permit unrestricted Voice over Internet Protocol (VoIP) telephony will help bring down the tariffs.

At present, the country has the cheapest call charges in the world at around 1 cent per minute. The country is also adding over 9 million users every month.

“The prices will fall as the new players would start operations with lower tariff-based plans. This would be done to get a good subscriber base, which is necessary for a better average revenue per user (ARPU), a measure to gauge the financial strength of a company,” said Manesh Patel, partner (risk advisory services), Ernst & Young. New licencees such as Datacom Solutions, Unitech, Shyam Sistema, Swam Telecom, STel and Loop Telecom are planning to start operations this year.

Tata Teleservices and Reliance Communications are looking at commencing GSM operations, while Idea Cellular has already launched services in Mumbai, Bihar and Orissa.

The entry of the new players will result in “effective” reduction of tariffs, meaning operators will reduce tariffs by launching innovative schemes and services. This also means that to get the benefit of the fall in tariffs, a user has to either move over to a new scheme or switch operator, opined Patel.

But the telecom service providers are going to be hurt by this move.

“Given the present market condition, any fall in tariff will further burden the industry that is already reeling under pressure. This also comes at a time when electronics and equipment manufacturers are planning to increase prices,” European handset major Meridian Mobile’s India CEO Rajiv Khanna said.

The GSM operators’ average revenue per user declined by 9.8 per cent to Rs 239 in June from Rs 264 a month ago, while that of CDMA operators’ fell by 12.6 per cent to Rs 139 during the period from Rs 159 recorded in March. It is going to be tough for the service providers, said Khanna. The price slide is expected to continue in the early months of the next year makIng the going tough for the operators.