“Something has to give” is the message emanating out of India about the cut-throat competition in the local mobile market.
Telecom minister Kapil Sibal has accused Indian mobile operators of being “at war,” and “trying to destroy each other,” Economic Times reported.
Sibal warned in an interview that the industry risks destroying itself if it continues its intense rivalry.
He blamed the long-running 2G scandal on in-fighting in the sector, with some operators resorting to questionable means to try to gain a political advantage, but implied that this was not the first time operators have sought such a leg-up on the competition.
Sibal is eager to have India's largest mobile operators find common ground before he formulates a new telecom policy, but has had little success. He is under pressure from a cash-strapped government to commence a spectrum auction, but can't do so until the policy is complete.
But whatever the motivations for Sibal's warnings, there's no denying that margin squeeze has become a pressing issue in a market where tariffs are now among the lowest in the world.
Fortunately, there's hope on the horizon, with incumbent mobile operator Bharti Airtel recently increasing its tariffs by 20% to 25% in some regions.
Analysts now expect rivals - particularly smaller operators – to quickly follow suit, giving them a much-needed respite from the squeeze.
Tata DoCoMo, the operator largely held as being responsible for the latest battle in the tariff war by introducing one paisa ($0.0002) per second billing, also recently revealed it will double call rates for subscribers after the first year, DNA Indiasaid.