Reliance Communications (RComm) has joined the ongoing tariff war all guns blazing–starting from its extensive customer experience programme (distributing free minutes) in January to launching Simply Reliance plan on its CDMA and GSM networks to all pre-paid and post-paid users. Mahesh Prasad, president, wireless, VAS & data, RComm, spoke to Fe?s Nikita Upadhyay and Rachana Khanzode about sustaining the business in the competitive tariff environment. Excerpts:
How are you looking at the ongoing tariff war? What would be the differentiating factor for RComm?
In this competitive environment, where 11-14 telecom operators are present, new players have taken up the easy tactic of hooking on to the tariff war. The differentiating factors for us would clearly be the network quality, customer service and innovation. The plan is to be technology agnostic, indifferent to a subscriber being pre-paid or post paid. We were looking at breaking the clutter and that?s what we have done with the Simply Reliance initiative. The customer at the moment is thoroughly confused about what he should pick up as a tariff plan. This (Simply Reliance) has given customers clarity and transparency in terms of what they are going to be charged. Our subscribers expect us to be competitive on the tariff front and through this initiative, we have covered the entire arena of tariffs being offered in the market. At the same time, you need to understand that the bulk of our subscribers are not looking just at a 1-paisa-per-second kind of plan, but at a plan which has no hidden charges, where there’s no catch and is easy to understand.
What are your capex plans to strengthen your network?
Clearly, our capex plans are not going to be on the same level as last year because that time the bulk of our capex was used in building our network for the GSM launch. Now, it is going to be planned quarterly rather than yearly. We will continue to invest in our network to have adequate coverage and capacity.
How will the Simply Reliance plan work the numbers for you?
The 1 paisa per second is actually not an innovation because a number of players in the past have already done it. The Simply Reliance plan was an initiative to churn out the high base GSM post-paid subscribers who have been staying with other operators. We have never been able to address these GSM subscribers before in this fashion. If a subscriber is looking at another connection just for the tariff, we should be able to provide that. The take-away ARPU (average revenue per user) split among multiple SIMs would then remain in our network itself. Given that there is a 60% churn rate at the moment, this is going to work. The rest 40% are held hostage to a network due to their number stickiness. However, in the post mobile number portability, these would be the first guys to churn out. Then the prevailing tariffs will not hold ground.
Can we say the third quarter for the firm is going to be better than Q2?
We cannot come out with conclusions so early because it?s hardly four weeks and there have been so many changes. It would be really immature to extrapolate information from the available data. At the same time we are witnessing a positive response till now. The incoming to outgoing call ratio on our newly launched plan is almost 50:50. So you can assume that it is going to be a positive quarter for us. Our expectations are that the minutes of usage will go up.