If we believe that continually declining data pricing stimulates data consumption (volumes) and penetration, it should result in greater capex / spectrum down the road as the
networks get congested faster; this is not good for free cash flows and return on capital.
To think that data price reduction is not a big concern as volumes will rise in response to price correction so as to keep the consumer wallet unaffected is not right (even for the moment assuming significant price elasticity of data). Servicing rising data usage (volumes) entails higher capex/opex. Today, there seems to be sufficient data spectrum in India but this may be sufficient to accommodate 3 years of 50%+ annual data consumption growth at the most by which time the data networks will feel fairly congested.
Idea and
Vodafone India more vulnerable than
Airtel /
Reliance Jio here.
