Wednesday, June 20, 2012

Vodafone joins 3G price war; cuts tariff by 80%

On one hand, telcos are battling the 2G auction diktat, while on the other the 3G war amongst the companies is heating up. Following its contemporaries, Vodafone announced that it has slashed 3G tariffs by up to 80%.
Vodafone’s move makes it the fourth telecom service provider after Bharti Airtel, Idea Celluar and Reliance Communication to reduce rates. 

According to experts, telcos are trying to monetize on 3G investments as it has so far dent profits. Moreover, experts point out that 3G investments have led to higher depreciation and interest payout. 

3G dynamics
3G investment has led to higher debt level
3G contribution to revenue under 10% presently
3G subscriber base under 10 mn for leading telcos
Roughly 25% 3G subs are active
Rural penetration still low
Domestic market price sensitive
3G to be main growth driver
Key highlights:
New entrants sparked cuts in voice tariffs post 2009
Telcos hiked voice tariffs in July 2011
3G rate cut intended to offset effect of hike in voice tariff


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