India’s telecom price war is back, and this time the battle is being fought with freebies.
After announcing last year the first tariff increase in three years, telecoms are offering incentives such as subscriptions to services from Netflix to Amazon Prime to win customers in a content hungry market.
With theaters in India, among the biggest film markets globally by number of tickets sold, closed due to COVID-19 pandemic restrictions, the demand for entertainment content has shifted online.
Several big-budget local films have been released on streaming platforms this year.
On Tuesday, Reliance Jio Infocomm Ltd, the nation’s biggest telecom by subscribers, launched a new 399 rupees (US$5.40) plan for users who opt for monthly billing instead of pay-as-you-go packs. Besides 75 gigabytes of data, customers would get access to Netflix on a mobile device and one-year subscription to two over-the-top (OTT) applications and access to Jio’s movie and songs library.
“Reliance Jio’s new postpaid plans offer more content and come at 20 percent discount” to Bharti Airtel Ltd, analysts at Jefferies India Pvt said in a report to clients.
Bharti’s comparable entry-level plan is priced at 499 rupees and offers the same amount of data, but does not include access to Disney+ Hotstar and Netflix, while Vodafone Idea Ltd’s plan offers 40GB data and does not include any of the three online platforms, analysts said.
Over the past four years, the number of users opting for monthly billing of mobile services has come down sharply and such users now form about 5 percent of the total 1.14 billion subscribers and generate 15 percent of the sector’s revenue, analysts said.
Although Jio introduced its postpaid plans in 2018, the company’s offerings did not see much traction, showcasing “stickiness” of this base of customers, Morgan Stanley analysts said.
“This time extremely aggressive content offerings could be the key attraction for consumers,” Emkay Global Financial Services Ltd analysts Naval Seth and Sonali Shah said in a note.
They expect Bharti and Vodafone Idea to follow Jio with similar tie-ups with OTT platforms to retain the monthly bill paying customers whose average monthly spending is higher than the prepaid users.
Bharti Airtel has lost nearly 9 percent, while Vodafone Idea has fallen 12.7 percent in two sessions since Jio announced the enhanced postpaid plans.
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