Reliance Jio has triggered tariff battle; Idea, Vodafone to strike back with attractive pricing

When Mukesh Ambani announced the tariff plans of his Reliance Jio, he started a sort of pricing war in the telecom sector.

Ambani disrupted the sector by offering 1GB data for just Rs 50, when other operators charge at least Rs 250 for the same.

He also announced free voice calls from Reliance Jio to any operator, also asking other operators not to disrupt the common touch point.

The string of announcements made during the Reliance Annual General Meeting (AGM) tanked Vodafone and Idea’s shares.

However, Airtel, Vodafone and Idea will be battling it out with more lucrative offerings.

Rajan Mathews, director-general of GSM industry body Cellular Operators Association of India, told ET the incumbents could match Jio's launch offerings.

"The battle lines have now been clearly drawn. You have Jio with Reliance Communications, Aircel and MTS on one side and Bharti, Vodafone and Idea Cellular on the other," he said.

It also noteworthy that the telecom industry in under Rs 35,000 crore of debt and with the airwave auction coming up, the debt is going to go up.

"Jio's launch has been one of the key worries we have had for the last couple of years, and this is turning out to be quite negative. We continue to stay cautious," Credit Suisse said.

The consumers are going to benefit from the pricing war but it is yet to see how sustainable the model is.