A major price war in the India mobile market is resetting mobile operator revenue expectations, reducing profits and driving a major consolidation wave should result in an industry quite a bit different than exists today.
There will be fewer players, voice clearly will have been dethroned as the revenue growth driver, and India’s mobile companies will face new problems more common to those faced by mobile companies in advanced markets, namely an exhaustion of products they can sell to consumers.
At the same time, the profitability of new mobile data access products will be resized, lower. Consumers will benefit from the lower prices, but mobile data might not replace lost voice revenues.
At the same time, the capital intensity of the mobile business is going to increase. A rough rule of thumb now developing is that capital per customer in the data-lead era might be as much as three times the capital per customer in the voice era.
The other implication is that additional usage, which was directly positive for suppliers in the voice era, will fail to be so positive in the data era. Simply, capex requirement might outstrip incremental revenue earned from deploying that capital.
And the price war continues.
Though we might still have to wait a while to find out what Reliance Jio do about “every day” pricing of mobile data after the six-month free trial it has been running, Jio now has launched another retail offer to replace the free data offer, creating a new mobile data plan sold for a nominal cost for the three-month period after the free data offers end at the end of March 2017.
The new offer, valid till June 30, 2017, will charge a fee of about Rs 100 (about US$1.50) for data, while voice will be free.
