Cell-shock: no discounts on SMSs this New Year

Written by Nikita Upadhyay | Nikita Upadhyay | Mumbai | Updated: Jan 1 2010, 04:40am hrs
Mobile subscribers will have to shell out more to greet their friends and family this New Year. Dropping all promotional and discounted tariffs, Bharti Airtel, the countrys largest mobile company, will charge all messages and voice calls at a standard rate on December 31 and January 1. Vodafone, Idea Cellular, Aircel and Tata Docomo will charge standard rates for its short messaging services (SMS).

Under standard rates, applicable across wireless subscribers of these mobile firms, the customer will have to pay Re 1 for local SMS and calls, Rs 1.50 to Rs 2 for national SMS and calls and Rs 5 for international messages. This is as much as 50%-60% more than the discounted tariffs these companies have been offering on a promotional basis. However, Reliance Communications (RComm) has decided not to increase SMS tariffs on New Years day, as well as on other festival days and will continue to offer its SMS tariffs of 1 paise for SMS on these days.

Although telecom operators offer lowest possible tariffs, this does not hold good for special days so called blackout days. The move to bring in standard rates on such days will boost the revenues of telecom players substantially. SMS normally comprises 10-15% of mobile firms total revenues from value-added services (VAS). As compared to voice calls, texting costs less and bulk messaging saves time.

We expect our SMS traffic to grow by over four times on December 31 and January 1, 2010. The number of SMS sending customers is also expected to go up substantially as our SMS prices are perhaps the most attractive, GurinderSingh Sandhu, senior VP, marketing, Tata Docomo, said. Whenever an operator launches a promotional tariff, it is done with an exception mentioned in the fine print. Charging subscribers on standard rates during exceptional days is an industry wise phenomenon. While some may rule it out due to their under-utilised networks, most of them like us abide by it because we keep investing in network capacity, said Pradeep Shrivastava, CMO, Idea Cellular. It is difficult to estimate how much upsurge we will experience in SMS this year but I can certainly say that subscribers have been growing significantly on our networks, he added.

According to industry insiders, SMS volumes of mobile players grow by 300% per subscriber on New Year day. This accounts for an SMS average revenue per user (APRU) of Rs 250. With the upsurge in SMS traffic on special occasions, analysts expect telecom companies to rake in anywhere between Rs 61-184 crore on SMS alone. We are expecting anywhere between 40%- 50% increase in the SMS volume as against last year. This is on account of new subscriber additions to the tune of 10-15 million per month, as many of them will also be first time users, said an analyst with a brokerage firm.