RelJio triggers prepaid data price-war

Over a decade ago, Reliance Infocomm’s launch of a Samsung phone for ₹501 and very cheap calling rates in 2002 triggered an aggressive price war. Six years later, telecom companies started slashing prices after Tata Docomo started per second billing.

Telecom operators in India are waging a price war to retain and acquire customers ahead of Reliance Jio’s (RelJio) formal launch on Wednesday.

Over a decade ago, Reliance Infocomm’s launch of a Samsung phone for ₹501 and very cheap calling rates in 2002 triggered an aggressive price war. Six years later, telecom companies started slashing prices after Tata Docomo started per second billing.

Experts say RelJio is set to disrupt the telecom industry with cheap data. “Whenever a new player enters an industry, there are chances of disruption. RelJio could be that player ,” said Prashant Singhal, global telecommunications leader at EY, said.

Over a decade ago, Reliance Infocomm’s launch of a Samsung phone for ₹501 and very cheap calling rates in 2002 triggered an aggressive price war. Six years later, telecom companies started slashing prices after Tata Docomo started per second billing.

“Operators are definitely cutting rates. Rel Jio’ s launch will be a big challenge for the industry and it will be irresponsible for telcos to ignore it,” Mahesh Uppal, senior telecom analyst and owner of ComFirst, said.

Bharti Airtel, on Monday, slashed prepaid data rates by as much as 80%. The company currently has 38 million 4G and 3G users in India. Under the new schemes customers can avail a gigabyte (GB) of data for ₹51.

To avail the scheme, Airtel customers will have to recharge their prepaid numbers with ₹1,498. The recharge will include 1GB of data valid for 28 days. After limit is reached, the next 1 GB of data can be bought for ₹51. This can be done for 12 months. At present, the telco charges ₹ 259 for a 28-day 1GB pack.

It was followed by Idea Cellular and Vodafone. While Idea Cellular said that it had cut rates to be in tandem with other telcos, Vodafone said it slashed prices to avoid losing customers.

“This is a very competitive market and if you don’t cut prices of data, you will lose customers,” a top executive from Vodafone India, said adding that the trend was to offer more data at the same price.