India’s second largest telecom operator, Vodafone has slashed the internet data rates by 80%!. Vodafone slashed the internet tarriff for both prepaid and post-paid users in Karnataka, UP West and Madhya Pradesh and Chhattisgarh circles. This move, surprisingly expect to trigger a price-war among the top mobile service providers like idea, Airtel and Bsnl. The renewed 2G data tariff is now 2 paise/10KB in place of 10p/10 KB. According to Vodafone India, The data rates in other circles will be slashed in phased manner, with an aim to provide mobile internet facility to even small villages among India. It’s a fact that above 59% of India’s internet users only ever access internet via mobile devices.
“The overall internet penetration in India is low while the mobile penetration is very high. Most consumers will discover the power of the internet via the mobile. We are confident that this move will facilitate faster adoption and better usage,” said Vivek Mathur, chief commercial officer, Vodafone India. Analysts said Vodafone’s move may have been triggered by stiff competition in the 2G market in the country, where data usage is growing faster than 3G – accounting for almost 3-4% of operators’ revenues. Rumit Duggar of Religare avers, “Voice growth is slowing and 3G isn’t catching up as expected. However, since Vodafone has slashed rates only in three circles, the development will not have much impact on Vodafone’s margins. Price elasticity remains the key after such a steep price cut. Another important consideration is the fact that with Reliance Jio Infocomm’s launch, telcos may be forced to slash tariffs, so Vodafone may be trying to capture as much market share as possible before that happens.”
Other companies like airtel are expected to follow Vodafone by announcing a similar price-cut in the incoming weeks.