Hit by a loss of subscribers, Idea Cellular seems to be having second thoughts about its strategy of always pricing its packs above those of Reliance Jio.
The mobile operator has now slashed the price of its 70-day unlimited pack to Rs 398 from Rs 448 earlier for many of its 4G customers.
This makes its the first incumbent operator to ‘come down to’ Reliance Jio’s pricing.
In comparison, the other two incumbents — Bharti Airtel and Vodafone — continue to charge Rs 448 for their 70-day packs.
However, the Aditya Birla firm has not officially announced the slashing of prices, but is instead offering the new plan using its selfcare app and website. It is likely that the offer is not made available to those customers that it does not deem to be at risk of leaving.
The price cut comes in the wake of relentless market share gains by Reliance Jio.
TRAI numbers released yesterday indicated that the company had added 7.34 mln users in October, ten times more than Idea Cellular’s tally of 0.71 mln for the same month.
Incumbents such as Bharti Airtel, Vodafone and Idea Cellular calculated that they would not need to match Jio ‘tariff by tariff’ — as BSNL CEO Anupam Shrivastava put it — as they also offer the prestige and convenience of being the incumbents.
In other words, it was believed that if a user was given the option of activating an unlimited call and data pack on his Idea or Vodafone number largely similar to what is available on his ‘secondary’ Jio number, the customer would choose to activate the same on his ‘main number’, even if the pack price was slightly higher.
The conclusion was based the assumption that people would not mind paying a little extra for the convenience of making outgoing calls from their primary phone number instead of their new Jio number.
As a result — starting from late October — Idea, Vodafone and Airtel started offering plans that were slightly costlier than Jio’s, but not overly so.
Jio’s 149 plan was met with packs in the Rs 180-190 range, while its 399 pack was countered using 448 packs.
Moreover, the companies also hoped that pricing their packs slightly higher than that of the newcomer would encourage the newcomer to increase its own tariffs.
“Idea’s tariff is always at a premium, so that it is safe for them to raise tariff. Only the differential has reduced,” CEO Himanshu Kapania said recently, adding that his company would maintain a premium of Rs 50-100 per pack compared to the newcomer.
The latest move to slash the price from 448 to 398 indicates that the incumbents may be having second thoughts about the validity of the assumptions underlying this strategy.
Idea management has been under tremendous pressure to stop the bleeding of customers. The company has lost millions of customers in recent months as many opt to buy a new 4G handset and shift their usage to the new network instead of paying higher charges on 2G and 3G services.