MUMBAI Jan 3 Bharti Airtel Ltd,
India's top wireless carrier, said on Tuesday it would offer
free data to woo new and existing 4G customers, intensifying a
price war in the sector and sending share prices tumbling.
The package is Bharti's latest response to the entry last
year of new operator Reliance Jio, backed by billionaire Mukesh
Ambani, which shook India's telecom sector by offering free data
services until March 31.
Bharti said it would offer three gigabytes of free 4G data
per month until the end of the year for customers who switch to
some of its plans from other carriers and to existing customers
who upgrade to 4G by Feb. 28.
Prepaid users would have to sign up for a package worth at
least 345 rupees ($5.05) to get the free data, while other
customers would have to sign up for at least a 549 rupees
($8.04) monthly plan.
The new package sparked concerns that intensifying
competition will hit profits and margins in the sector and sent
shares of Bharti and smaller rival Idea Cellular both
down 2.1 percent.
Bharti had previously slashed prepaid tariffs and unveiled
cheaper data plans to compete against Jio, and other rivals have
also had to offer incentives.
But analysts warn that will extract a cost, with Vodafone
forced into a $5 billion writedown of its India business
last year because of competition in the country.
The outlook for India's telecoms sector, the world's fastest
growing internet services market by users, has further darkened
after the country's recent move to ban higher value banknotes
sparked a cash shortage that is hurting consumer demand.
"A combination of negatives in the form of demonetization
and Jio's free services is likely to result in fairly dismal 3Q
FY17 earnings prints for Bharti and Idea," Kotak Securities said
in a Jan. 2 research note.
($1 = 68.2879 Indian rupees)
(Reporting by Sankalp Phartiyal; Editing by Susan Fenton)