Data tariffs likely to decline, says Ind-Ra

Data tariffs of Indian telecom players are likely to decline due to increased competition, especially from Reliance Jio, according to India Ratings (Ind-Ra).

“Ind-Ra expects data tariffs to see a major correction due to the launch of RJio, while the benefits from higher data volumes, as well as subscriber growth will be back-ended. Data realisation per megabyte declined by 4.5-5.5 per cent (Q-o-Q) in Q3 FY16 for the top two listed entities Bharti Airtel and Idea Cellular.

Ind-Ra believes this price decline was in anticipation of the RJio launch, and therefore expects a further softening of data tariffs in FY17. Some 8-10 per cent (Q-o-Q) growth in data volumes consumption shall not be sufficient to support data average revenue per users which shall therefore moderate in FY17,” the rating agency said.

Ind-Ra expects voice revenue to decline in FY17, due to market maturity and competitive pricing.

 Airtel and Idea reduced voice tariffs by 8-10 per cent over 2015, to arrest declining MoU (minutes of usage) and to counter competition. Voice also faces threat from data cannibalisation, however, Ind-Ra expects it to be a credible risk only in the medium term, the rating agency added.