Fitch Ratings on Tuesday said the entry of Reliance Jio Infocomm in the telecom space would intensify competition and might bring data tariffs down by at least 20 per cent.
“The likely entry of Reliance Jio, which is a part of Reliance Industries Ltd. in 1H15 will intensify competition in the data segment, and may cause data tariffs to decline by at least 20 per cent,” Fitch said in its 2015 outlook for Indian telecommunications services.
Reliance Industries had announced that it would launch commercial 4G telecom service of RJio in 2015 entailing investment of Rs. 70,000 crore.
Fitch said Jio will focus largely on data and may have a limited impact on the incumbents’ core voice business, given a weak “voice-over-LTE” technology ecosystem and lack of affordable 4G-compatible handsets in India.
“We do not foresee a re-run of the tariff wars of 2009-2013, which led to a severe decline in industry tariffs,” Fitch said.
Fitch expects the top four Indian telcos - Bharti Airtel Limited, Vodafone India, Idea Cellular and Reliance Communications - to increase their revenue market share to around 83 per cent by 2015 from the current 79 per cent in the $30 billion industry.
“Industry revenue will grow by at a mid-single-digit rate in 2015, driven by data services. The top four telcos’ 2015 average operating earnings before interest, taxes, depreciation and amortization (EBITDA) margin will be mostly unchanged at 32-33 per cent as a decline in data tariffs will offset a gradual rise in voice tariffs,” it said.