Mobile phone tariffs could dip: Bharti

Consumers rejoice. Telecom operators promise you a tariff war.

Mobile phone tariffs, which are already the lowest in the world, are set to fall down further. Bharti Airtel, which slashed local call rates to one rupee per minute across all its plans in the first week of January, is open to slashing local call tariffs further.

“The existing market is so competitive that tariffs are bound to fall further," Manoj Kohli, President of Bharti Airtel, told Hindustan Times.

All other telecom operators had quickly matched Airtel’s revised rate of one rupee per minute across all the tariff plans.

However, earlier this month, Sunil Mittal, the Chairman and Managing Director of Bharti Group, had discounted tariff cuts, saying customers were more inclined to seek innovative offerings and better services.

Kohli discounted any threat from the entry of new players in the market, saying they will not be able to match up to entrenched leaders.“We don’t think that they will be viable”, said Kohli.

The new telecom entrants may not be able to match the existing players, but the entry of CDMA players like Reliance Communications and Tata Teleservices into the GSM space is bound to offer stiff competition to the incumbents. That, indeed, is expected to unleash a new bonanza in telecom tariffs for mobile phone users. Reliance Communications has already announced that it will start out with GSM services that are much cheaper than those offered by incumbents.

Even though telecom tariffs in India are the lowest in the world, on account of the growing number of mobile phone service subscribers, revenues of telecom operators are witnessing a growth rate of 45 per cent. The country is adding close to 8 million mobile phone connections every month. Market analysts say that as the average revenue per user falls in India, the revenue growth rate is likely to fall to 30 per cent to 35 per cent in the next two years.

Airtel has 60 million mobile phone subscribers, and is targeting 125 million subscribers by 2010. The company also plans to cover 90 percent of the country’s population in two years' time.