Reliance Jio impact forces Bharti Airtel to end roaming charges as first real signs of rate war emerge

By: |
Published: February 28, 2017 6:22:40 AM

After Reliance Jio announced its tariff plan, the country's largest telecom operator Bharti Airtel on Monday said that from April 1, it will abolish national roaming charges.

Reliance Jio, Bharti Airtel, Telecom War in India, JIo vs Airtel, National roaming charges, Gopal Vittal, Bharti's network in IndiaAfter Reliance Jio announced its tariff plan, the country’s largest telecom operator Bharti Airtel on Monday said that from April 1, it will abolish national roaming charges. (Source: Reuters)

In what can be seen as the first signs of a rate war after Reliance Jio announced its tariff plan, the country’s largest telecom operator Bharti Airtel on Monday said that from April 1, it will abolish national roaming charges and reduce international roaming charges by up to 90%. National roaming charges account for only 3-4.5% of the company’s revenue while international is even smaller, but while the former is more of an inconvenience to subscribers, the latter may give huge bill shocks to unaware customers who have not subscribed to some package.

On the national front, incoming roaming charges is 45 paise per minute, which will be totally abolished. For outgoing calls roaming charges will be removed so one will have to pay only the local outgoing charges, which is around R0.50 per minute. Earlier, a local roaming charge of 0.80 per minute was levied and R1.15 per minute for STD calls. These charges will be removed, virtually ending what is known as roaming rates.

Gopal Vittal, MD & CEO (India & South Asia), Bharti Airtel, said, “This marks the death of national roaming and the whole country will now be like a local network for our customers, who will not have to think twice before making or receiving calls or using data while travelling outside their home base. Airtel has again set the benchmark in delivering best in class value backed by a great network experience.”

Since Reliance Jio does not charge for voice calls, there’s no concept of roaming there. It is evident that Vodafone and Idea are also going to follow Bharti’s initiative on roaming charges. International roaming rates are prohibitively costly. On average, incoming calls are billed at around R50 per minute, outgoing at R150 a minute and SMSes at R15. To make the purse lighter for its subscribers, Bharti had last year in September made incoming calls free in popular destinations like the US, Canada, the UK and Singapore.

It did this by offering international travellers a daily pack and a monthly pack for around Rs 649. Anyone subscribing to it would get all incoming calls free, while outgoing to India as well as local calls will be charged at Rs 3 per minute after 100/400 free minutes while data charges will be at Rs 3 per MB against the normal Rs 650 per MB.
What Bharti has now done is to protect even customers travelling international without a pack. In their case, through an automatic adjustment, charges will be made equal to the daily pack for that particular country. This means that the moment a customer’s billing reaches the price of a one-day pack for the country, he/she will be automatically moved to that pack. “This will allow our customers to use their devices abroad without any fear. Even post the exhaustion of pack benefits, customers will continue to enjoy extremely attractive rates for calling and data usage. Call charges have been reduced by up to 90% to as low as Rs 3 per minute and data charges by up to 99% to Rs 3 per MB across popular roaming destinations,” the company said in a statement.

Cutting charges on international roaming won’t hurt the company since international pacts are done on the basis barter deals. This means that the subscribers of overseas operators will also be charged on similar lines for roaming if they roam on Bharti’s network in India. Incumbents like Bharti would have an edge over Jio in the international roaming part because overseas operators do barter deals based on subscriber base and a new entrant takes time in cutting such deals.

You might also want to see this:

Last week, Reliance Industries chairman Mukesh Ambani said that its telecom arm Jio will start charging its subscribers from April 1, but since its tariff are far lower than that of incumbents, analysts said that a round of tariff war is imminent.

Jio, which has crossed the 100-million subscriber mark said that existing subscribers as well as those who come on board by March 31 will be eligible to join the company’s Prime membership programme on payment of Rs 99 for a one-year period. Under this programme, subscribers will have to pay Rs 303 every month for the next one year and will get 1 GB data every day, which means 30 GB in a month, which is much higher and cheaper than any of the offers of incumbent operators.

For later entrants (non-Prime users), Jio would do a comparative analysis of all the data packages by competitors and offer 20% more for the same charge. To put it in perspective, on average a bundled data plan by incumbent operators offers data at Rs 50 per GB or Rs 25 per GB in some cases, but Jio’s rates are Rs 10 per GB.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.