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GSM majors to counter RIM pre-paid offensive

16-August-2004
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GSM majors to counter RIM pre-paid offensive

The price war in the wireless space has resurfaced. Just when cellular users were informed by service providers that their roaming tariffs would increase, Reliance Infocomm has announced a steep cut (as much as 60 per cent for some calls) in its pre-paid tariffs starting Monday.

The move is likely to change market dynamics as it is the first major price war in the pre-paid segment. Cellular service providers have, however, said that any significant price cut is unlikely.

“What might perhaps happen is that the user may get more value-added services like additional talktime or even free SMS for a limited period,” said a senior official at a cellular company.

Officials at GSM companies are maintaining a wait and watch policy. “We need to study the issue in detail since we have just hiked our roaming tariffs.

This has certainly upset our revenue projections,” one GSM operator said.

He pointed out that any freebie will be difficult to sustain for an indefinite period. Not surprising since the pre-paid segment accounts for about 70 per cent of the overall wireless market and 80 per cent of the incremental subscriber base each month.

But what do Reliance’s new tariffs look like? For an intra-circle call made from one RelianceIndia Mobile (RIM) phone to another, the pre-paid user will now shell out 99 paise per minute compared to Rs 2.49 earlier.

This is lower than what a post-paid entry-level user would normally pay for intra-circle calls.

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