New Delhi: The tariff tailspin has trapped the ringmaster, too. And escape -- no, it is not on the horizon. Nothing exemplifies this better than what Bharti Airtel, India's largest and most profitable player, did on Friday.
When Akhil Gupta, CEO, Bharti Enterprises, began his earnings call on Friday morning, he sounded unusually uneasy about the tariff war, but spiritedly said the company was not in the race to 'match the lowest denominator'. At various times during the call, Gupta and others underscored the issue, betraying perhaps unsaid angst over the deleterious impact price disintegration is engendering.
By evening, Bharti, too, failed to walk the talk: It announced its first per-second billing plan, a gambit launched to great effect by rookie Tata DoCoMo. Welcome to the new reality of telecom, analysts say.
"Nobody can escape the tariff war in such a highly competitive telecom space as India. Bharti has to protect its leadership, especially since mobile subscriber additions have dipped 4% in the September quarter from June. This, even as rivals are racking up good numbers offering lower tariffs," an analyst with a foreign brokerage, who did not wish to be named, said.
When specifically asked about Bharti's plan on introducing the per-second plan, a company executive said the industry experience was that most mobile subscribers speak for over a minute on a call, thereby indicating that such a plan may not be of much use.
Called Freedom Plan, it offers local and STD calls at 1 paisa per second, or 60 paise per minute.No escaping the tariff vortex
Recently, rival Reliance Communications (RCom) had cut its outgoing call rates to 50 paise per minute from around Re 1. The regulators and ministries are also making it hot under the collar. The Telecom Regulatory Authority of India chairman J S Sarma has said per-second billing should be made mandatory.
Union minister for communications Andimuthu Raja said mobile tariffs should come down to as much as 10 paise per minute. That's quite a change from the time `One India' plan was introduced with much fanfare in 2005, when government owned telcos BSNL and MTNL had started offering tariffs at Re 1 per minute, which was then followed by private telcos.
Whither, from hither? Free voice calls is a logical possibility, some say, but then value-added services and data services and their tariffs will be crucial to the fortunes of players.
Sanjay Chawla, senior vice-0president and telecom analyst at Anand Rathi Securities, said "things are very fluid at this point". Tariffs hitting new lows, he said, "would burn out the smaller players and ultimately lead to consolidation."
But, consolidation would not be automatic, since that depends on factors such as the willingness of smaller players to exit, the regulatory framework that would remove the merger barriers, and clarity on spectrum policy.
India offers the lowest mobile phone tariffs in the world. And despite falling average revenue per user or the so-called ARPUs, the industry is adding over 10 million subscribers every month.
Interestingly, the tariffs are also hitting the floor at a time when mobile number portability (MNP) is just round the corner. That's another foot on the operator's chest. Once MNP is in, a mobile subscriber can shift to another service provider while retaining the same phone number. That makes the going still tougher because retaining customers can be a tricky proposition amid collapsing tariffs.
While telcos are heralding hinterland's connectivity leap, their business side is in a wretched rut, a vicious circle.


