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Will telecom price war escalate as Jio enters postpaid with Rs 199 plan?

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The price war in the telecom industry is about to escalate as Jio announces its entry to the postpaid segment. May 15 onwards, Jio will begin offering its postpaid plan for Rs 199, with unlimited voice and SMS and 25 MB data. The postpaid numbers will come with pre-activated international calling, rates for which start at 50 paisa per minute. Jio’s offering, notably, is nearly half of industry standard. Airtel offers unlimited (calling and SMS) postpaid at Rs 399, and so does Vodafone. Both service providers have a certain fee for international activation. The newly announced postpaid service by Jio also offers international roaming (without special packs) in two slots: Rs 2 per minute on calling, per MB of data and per SMS, and Rs 10 for each minute, MB and SMS. In a press release, Jio has claimed that these rates are lowest in the world, for both budget and high-users. While we cannot be sure if these rates are the cheapest, they are sure to have an impact on the industry. Implications? In the past two years, telcos have offered lower rates in a bid to acquire/retain consumers in the prepaid segment, which has led to falling of revenues for the telecom industry overall, and dipping average revenue per cosumer (ARPUs). While postpaid segment accounts for only about 5% of the total consumers in the ecosystem, they are have high ARPUs and are associated on a long-term basis. Postpaid accounts for nearly 25% of telcos’ revenues. So, if…

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