The advent of Reliance Jio has stirred things up in the telecom market, most visibly in a torrent of free and low-price services and a war for customers.
Established telecom players are for now being compelled to play that game even if they are not convinced it’s the best way to respond. Free services, says Gopal Vittal, Managing Director and Chief Executive Officer (India and South Asia) of Bharti Airtel, “will not run forever, because... everyone wants a return from investment.”
In an interview to
Although he clearly did not want to be drawn into any kind of verbal duel when reacting to the strategies adopted by Mukesh Ambani’s Reliance Jio, it was hard to avoid the subject.
“Competition has always been there in the industry. People are coming in well-capitalised, making network investments… Every time a new entrant comes in we have bumps — ups and downs — and some compression in pricing…” Vittal noted.
“Will we see some bumps around the price circles? The answer is yes, we may,” he added.
Before the launch of Jio, Vittal had said he hoped Reliance would not opt for “irrational” pricing. Asked to define “irrational”, he said, “What is irrational for us could be very rational for a new entrant because, from a new entrant’s perspective, there is capex, and you would look at pricing as a lever to get customers.”
However, beyond that, “we have to ask ourselves: what’s our purpose?” Vittal said. At Airtel, he says, it’s very clear: to earn customers for life and grow market share.