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TRAI collecting price floor feedback as small Indian players take a hit

TRAI collecting price floor feedback as small Indian players take a hit

Indian regulator TRAI will meet with the country’s mobile providers on 21st July to discuss the possibility of establishing a minimum tariff for voice and data services.

TRAI has requested that operators present their arguments in favour of a price floor, as well as provide a detailed justification for rejecting price caps. The talks follow calls from several mobile operators for the regulator to enforce a minimum tariff on voice and data to clamp down on operators pricing services at less than it costs to deliver them.

Currently, the only criterion for tariff pricing is that operators must inform TRAI of their intended rates seven days before launching them, so the introduction of a floor price would be a significant policy shake-up.

Demand for the policy has gained support following Reliance Jio’s entry to the market last September. The newcomer 4G provider offered free voice and data packages and extended low-cost promotions, which saw it rapidly attract 100M subscribers while causing heavy Q1 losses for market leading operators, such as Bharti Airtel and Idea Cellular. TRAI’s statistics showed monthly ARPU falling almost 21% in Q1 2017 compared to the previous quarter, down to INR83 ($1.29).

However, Jio’s impact was felt most by India’s smaller players, with the majority of its gains being wooed from operators such as Aircel, RCom, Tata Teleservices and Telenor. Jio’s market share currently stands at around 9% of the country’s active mobile users, with as much as 80% of its total subscribers having been won over from smaller rivals.

Across April and May 2017, Jio added 8.7 million users to bring its active total up to 89 million, while India’s smaller operators collectively shed around 5 million subscribers during this time, according to figures from the broker CLSA. Market leader Bharti Airtel was the only other operator to gain subscribers in this period, adding a further 1.5 million active users.

Jio also looks to have made gains from second- and third-placed Vodafone and Idea Cellular, which respectively lost 100,000 and 400,000 subscribers during these two months. However, despite Jio’s shake-up of the market, the big three Indian players only saw a minor drop in their overall market shares.

CLSA believes that smaller operators will continue to bear the brunt, as the unlimited voice plans that larger operators are able to offer remove any requirement for a second, voice-only connection. Currently, India’s smaller players have a collective market share of around 19%. 

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