“From end October, Idea has shifted its earlier stand of limited aggression, which was limited to offering unlimited plans to 4g users,” Kapania said.
“Earlier, we were not competitive, we were tentative. The prices were significantly higher. Not only Jio, but Bharti also was offering aggressive bundled offerings to a much larger base, while our offerings were not so attractively priced,” he said.
The shift in Idea’s strategy comes in the wake of a realization that Reliance Jio’s low-priced 4G plans are not going away in another quarter or two.
Unlike Bharti Airtel and Idea Cellular, who were offering only 2 GB of 4G data for Rs 450, Reliance Jio started by offering 84 GB of data for Rs 309 in April this year.
Though Jio unveiled its plans more than a year ago, rivals like Idea Cellular and Bharti Airtel did not announce ‘counter plans’.
Instead, they focused on defence and sent targeted counter offers to those of their subscribers who had a 4G smartphone. The strategy was based on the calculation that people who didn’t own 4G handsets were at a low risk of switching to Jio as they would have to buy new phones.
It was also based on the assumption that Jio’s tariffs were temporary — as the company suggested — and it would raise tariffs by about 200% by July-September.
However, by October 19, Jio had raised them by about 50% and it became clear that more hikes are unlikely in the near term.
The newcomer stopped calling its plans ‘offers’, and instead termed them plans.
These plans promised unlimited calls and 84 GB of data — spread over 12 weeks — at a price of Rs 449, a 45% increase over its initial tariff of Rs 309.
Since then, Idea has come out with its first set of competitive tariff plans that are available to all subscribers over the past two weeks.
Mirroring Jio’s plans, Idea too has unveiled three new plans: The first is the Rs 179 for an unlimited voice pack with a validity of four week.
The second is the Rs 350 pack with unlimited calls and 1.5 GB of data per day for four weeks, and the third is the Rs 450 pack that offers same benefits as Jio’s 450 pack, but with a limited validity of 10 weeks instead of 12 weeks.
In high-income states, Idea has cut the validity of the Rs 179 plan three weeks from four, while the 449 pack is priced at Rs 498.
Kapania said these plans, unlike its earlier offers, are available to all subscribers.
Moreover, the company will be conducting a mass marketing campaign to advertise these new packs, he added.
REDUCING JIO ALLURE
For now, the company faces an uphill battle in winning back its subscribers from Jio.
Out of the company’s 184 mln users, about 100 mln have 3G or 4G phones, but only 30 mln are using Idea’s 3G or 4G services.
Many users upgraded to dual-SIM 4G phones with the primary aim of availing Reliance Jio’s ultra-cheap offers. These users continue to use their Idea number on the 2G slot of their handsets, while using a Jio SIM in the primary slot to make free calls and use cheap data.
Kapania said that under the policy of offering cheaper rates to 4G phone users only, many 2g and 3g users were led to buy 4g handsets to become eligible for unlimited plans.
For a policy intended at countering Jio, it also made these subscribers more likely to try out the services of the new operator.
With the new unlimited plans, Kapania said, everyone can use unlimited plans without upgrading to a 4G handset.
So far, he added, the percentage of subscribers signing up for such unlimited plans has touched double digits (10% or more).
“Most of the market expects this to go to 40-50%. We are preparing ourselves (for this),” he said, adding that it has sufficient 2G voice capacity to handle any increase in traffic without investing more.
“We can handle up to 40-50% of customers if they move to 179 plan,” he said.
Even as it strives to remain competitive, said Kapania, Idea will maintain a slight premium so as to encourage others — read Jio — raise their rates.
He said Idea continues to charge a premium of Rs 50-100 rupees per pack.
“Idea’s tariff is always at a premium, so that it is safe for them to raise tariff. Only the differential has reduced,” he said.
He also urged his competitors to ensure that their offerings are not priced too cheap. “Growth will be good enough for all operators to live in peace rather to try to eat each other by offering it below cost,” he said.