vodafone-logoVodafone India has reduced their 2G data rates from 10p/10KB to 2p/10KB for all pre-paid and post-paid customers using 2G network on ‘pay as you go’ services in select circles.  It is worth noting that that monthly data customers would be charged 10p/10KB after their data plans expire. Since these price changes are only for ‘pay as you go’ data customers, heavy data users would find it best to stick to monthly data plans.

These rates are currently applicable in Karnataka, UP West and Madhya Pradesh & Chhattisgarh circles and the company intends to roll out this change nationally in a phased manner. It is interesting to see that Vodafone has not introduced these new rates in the  metros cities including Delhi, Mumbai and Kolkata and has instead launched it in other parts of the country.

In January 2013, we had reported the increase in 2G data tariffs by Bharti Airtel, Vodafone and Idea have hiked up 2G data tariffs by almost 30 percent to cover costs and improve margins. It is not quiet clear why Vodafone, 5months later has reduced its 2G rates.

However, we believe that these lowering of prices may be related to DoT’s rejection of the company’s application for license extension in Delhi, Mumbai and Kolkata circles. It seems that by offering these new prices, the company may be trying to increase its customer base and data usage in other service areas to make up for the loss, in case the licenses are not renewed.

Earnings from data services: It is also worth noting that Vodafone India had recorded 34 million 2G customers for quarter ending March 2013, up 3.4 million from 30.6 million 2G customers in the previous quarter.

The company had also recorded a total data revenues of Rs 3,175 billion for the financial year ending March 31, 2013 (FY13), registering a 19.9% growth from Rs 2,640 billion data revenues in FY12. Data now contributes to 7% of the company’s total service revenues in FY13. The new price slash could also be an offshoot of the increase in their data revenue.