Tata Tele offers 30p/minute STD
06-08-2010
That's below cost, say some analysts
Perhaps its long-distance network is underworked compared to its local network. Tata Teleservices sprung a surprise by launching an aggressive tariff plan for pre-paid subscribers of its CDMA brand Tata Indicom. The scheme pegs the STD rate at 30 paise per minute across networks for 600 minutes in 30 days.
That's well below the local tariff of 50 paise per minute being charged by players in the market and could spark off intense rivalry between mobile operators for customers who make frequent STD calls.
Sanjeev Khera, Karnataka regional head at TTSL said the new plan was aimed at increasing STD calling and pushing up the firm's market share. Tata Tele at present earns just 20% of its voice revenues from STD calls. "We expect a substantial leap in STD calls through this plan. It will also help us expand in new markets" said Khera.
Industry analysts, however, believe TTSL is chasing expansion of subscriber base at the cost of profitability in the short term through the new plan.
"This kind of tariff rate for STD calls is likely to be below cost because it is impossible to offer such a plan as there are prescribed carriage and termination charges by the Telecom Regulatory Authority of India (Trai) when you are carrying long distance calls" said an analyst with broking house
In June, Tata Tele's overall market share including CDMA and GSM was 11.4%, as against Reliance Communication's 17.4%, Vodafone's 17.1% and Idea's 10.8%.
Khera dismissed concerns about his company offering tariffs at a loss. "Our corporate teams have arrived at this tariff rate after complex calculations. It is a well-thought out plan for the CDMA pre-paid users that offers high value to them. We have no plans to withdraw it soon" he said.
Based on story in DNA
Perhaps its long-distance network is underworked compared to its local network. Tata Teleservices sprung a surprise by launching an aggressive tariff plan for pre-paid subscribers of its CDMA brand Tata Indicom. The scheme pegs the STD rate at 30 paise per minute across networks for 600 minutes in 30 days.
That's well below the local tariff of 50 paise per minute being charged by players in the market and could spark off intense rivalry between mobile operators for customers who make frequent STD calls.
Sanjeev Khera, Karnataka regional head at TTSL said the new plan was aimed at increasing STD calling and pushing up the firm's market share. Tata Tele at present earns just 20% of its voice revenues from STD calls. "We expect a substantial leap in STD calls through this plan. It will also help us expand in new markets" said Khera.
Industry analysts, however, believe TTSL is chasing expansion of subscriber base at the cost of profitability in the short term through the new plan.
"This kind of tariff rate for STD calls is likely to be below cost because it is impossible to offer such a plan as there are prescribed carriage and termination charges by the Telecom Regulatory Authority of India (Trai) when you are carrying long distance calls" said an analyst with broking house
In June, Tata Tele's overall market share including CDMA and GSM was 11.4%, as against Reliance Communication's 17.4%, Vodafone's 17.1% and Idea's 10.8%.
Khera dismissed concerns about his company offering tariffs at a loss. "Our corporate teams have arrived at this tariff rate after complex calculations. It is a well-thought out plan for the CDMA pre-paid users that offers high value to them. We have no plans to withdraw it soon" he said.
Based on story in DNA
