The direct and effective (through data allowance increase) fresh price cuts in the smartphone segment announced on Jan 9, 2018 and (2) the new `49 (28 days, unlimited voice, 1 GB data) plan announced for Jio Phone on Jan 26, 2018. Jio indicated that this price cut was a response to the incumbents? attempts to close the pricing gap versus Jio and termed it a clear signal of intent to the incumbents.
Cut in international termination rate (ITR) effective Feb 1, 2018: TRAI?s decision to cut ITR to 30 paise/min from 53 paise/min became effective Feb 1, 2018. Idea and Bharti indicated that this impacted revenues by around 1-1.5% for the quarter. We do note that this revenue loss for the incumbents did not benefit the Indian consumer or the exchequer.
As discussed above, ARPU bottom may still be some time away. This would keep the incumbents? P&L?s under pressure even as the need to invest in networks remains high. We do expect Bharti to emerge fine in most plausible scenarios and remain positive on the stock.
