If 4G entrants were to delay charging subscribers too much, it may become hard to monetize their data offering. Reference can be made to e-commerce players in India, some of which seem to have had difficulty getting traction after taking away the initial discounts/offers.
4G entrants seem to be ahead with their content apps and live TV streaming offerings at present. However, incumbents may not be far behind as Idea announced its digital strategy recently to likely launch apps around news, music and movies and live TV over the next 6-9 months. Airtel has already launched its apps around music and movies. It is possible that incumbents may not have similar depth and breadth initially; nevertheless, too much delay in a commercial launch may not bode well for 4G entrants by allowing incumbents to improve their digital offerings.
We believe if 4G entrants attempt to cater to both segments of the market, they may not be able to differentiate versus incumbents around data capacity, and such an approach may create arbitrage opportunities for subscribers and lead to ARPU dilution. In our view, a tariff increase at a later stage is a very complex exercise; hence, initial price points and positioning are likely to be critical.
