Airtel, Vodafone, Idea Slash 2G Data Rates. Tariff Wars are Back

2G-rate-cut-chart-finalThis is fantastic! The tariff wars are back. Airtel, Vodafone and Idea, three telecom players which serve more than half of India’s telecom subscribers, have cut charges for data on their 2G networks by more than 80%.

Airtel, which has more than 40 million data consumers (including 6.4 mn on 3G), has slashed 2G data rates by by 90 % in Uttar Pradesh East, Haryana, Madhya Pradesh, Maharashtra, Kerala, Gujarat, Kolkata, Punjab and Orissa. It now charges 1 paise for 10 kilo bytes of data as opposed to 10 paise per 10 kilo bytes earlier.

Similarly, Vodafone has cut 2G data charges by 80% in Madhya Pradesh, Karnataka, Chattisgarh and Uttar Pradesh West. It now charges 2 paise for 10 kilo bytes of data. Idea will cut 90% 2G data charges to 2 paise per 10 kilo bytes in Tamil Nadu, Chennai, Karnataka, Kolkata, West Bengal, Assam, North East, Bihar & Orissa from July 1.

This is reminiscent of early days of mobile telecom in India when operators were tripping over each other to acquire more customers. With voice customer growth starting to plateau (see graph below), data is the new frontier. All telecom players are bullish on 2G and 3G data consumers. Total Customer Base

Why are they doing it?

It’s obvious, innit? Acquire customers, get them hooked and then monetize. Sort of how one would assume Cocaine is sold. In their latest quarterly earnings, this is what the telcos had to say

Innovation with a focus on 3G data and m-commerce continues to be the next growth frontier. Airtel is focused on 3G through the roll out of new sites across markets to increase user base.” — Airtel, Quarter Report Ending March 2013.

For Vodafone in India, driving data opportunity is a key priority. Vodafone’s data revenue grew 29% year on year in the quarter ending March 2013 and 6% quarter on quarter.” — Vodafone, Quarter Report Ending March 2013.

We hold an opinion that there is still a lot of potential for growth in data ARPU and $1 per blended basis and $2 on a 3G basis is far too low. Going forward, we are expecting this number to go up.”– Idea, Quarter Report ending March 2013.

Get the drift? Data is big & telcos don’t want to miss out on the action.

Recommended Read: 3 Reasons to Believe 3G will Work in India