ISD tariff war

Leasing GSM player Vodafone Essar has initiated a tariff war on altogether a different turf, by offering per second billing for ISD calls. The third largest player in the market, Vodafone Essar, launched new world calling cards for its prepaid and postpaid customers. The World Calling Cards offers per second tariffs for both STD and ISD calls across several destinations. However, the ISD was not slashed in any of the neigbouring SAARC countries, which generate considerable amount of ISD tariff originating from India.

With this move, Vodafone Essar is eyeing customer with high ARPU, which is falling now.

"Voice traffic has already touched low. The money lies in data services and VAS now. The move would help us to attract high-end users, having family and friends or business relations on foreign soils. Most of them are data users as well," said a senior Vodafone Essar official.

The ISD calls range from paise 4/ second to 13/ per second in some international destinations including the US, UK, Canada, Newzland, Gulf, South East Asia, Europe and China. So far the tariff war was limited to STD and locals only, which has touched a new low after the introduction of per second billing. Per second billing, an innovative concept, was introduced in India by Tata DoCoMo.

Kumar Ramanathan, chief marketing officer, Vodafone Essar said, “It's a first in the industry. The new Vodafone World Calling Card offers customers greater convenience, good value for money and seamless connectivity with family and friends in India and abroad.”

Now Vodafone Essar, backed by the huge financial mussel of Vodafone Plc and the Essar group, has threw a new challenge to its competitors. Vodafone Plc has a market value of about £71.2 billion (November 2009). It currently has operations in 31 countries and partner networks in a further 40 countries. Interestingly, Vodafone Plc operates services in all the countries directly or through a partner in countries where the ISD rates are slashed excluding China and USA. Though the company has 45% stake in Verizon Wireless, the largest telecom service provider in USA, it did not cut tariff in America.

The ISD tariff cut has the potential to curb the revenue growth of the telecom segment. The recent local rate reduction has already affected the revenues of operators such as Bharti Airtel and Idea Cellular.

akhileshs@cybermedia.co.in