The director general of the Cellular Operators’ Association of India (COAI) has claimed that competitive pricing in the market is unsustainable to the point that the country’s operators will make losses for at least the next three quarters.
Speaking to the Press Times of India (PTI), Rajan Mathews said that 2018-19 would be a “tough year” financially for Indian service providers as they faced high prices for spectrum along with escalating fees from the government for licensing and usage. He noted that operators had already seen losses over two quarters of this fiscal year.
The current tariff wars were instigated by the entry of Reliance Jio to the market in September 2016. The newcomer rapidly built up its customer base with tempting offers unlimited data and voice, discounted so heavily that they were practically free. The gamble paid off, and the operator has a market share of almost 20% with 215 million subscribers, according to The Economic Times.
Jio’s success has adversely affected its rivals, with profitability and revenue plummeting across the market. Data from TRAI (Telecom Regulatory Authority of India) showed that operators had experienced a 10% year-on-year decline in revenue to INR584 billion ($7.85 billion) between April and June, while in the same period post-paid ARPU was down 21% to INR307, with prepaid falling 9.2% to INR59.
Mathews noted that it was hard to imagine prices getting any lower than they currently are, as investment into network improvement would be impossible on the back of such low revenues.