Idea joins Bharti in cutting 3G prices by 70%

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Cuts likely to signal new era of competition in India’s crowded mobile market.

Idea Cellular Ltd. said Tuesday it reduced its third-generation Internet browsing prices by up to 70%, following Indian market leader Bharti Airtel Ltd. that last week announced a similar cut to increase usage of the high-speed service.
Idea, India’s fourth-largest mobile-services operator by users, said its prepaid and on-contract customers will now have to pay INR0.03 per 10 kilobytes of data usage, compared with INR0.10 earlier.
Indian telecom firms like Bharti and Idea have been focussing on increasing the usage of 3G data services to boost their revenue amid a stagnation in demand for voice services. The price cuts will now likely signal a new era of competition in India’s crowded and competitive telecom market.
A price war in the basic second-generation services segment had dented the profit margins in the sector and market players were expecting 3G data services, which usually command a higher usage charge, to aid their profits. But the companies have yet to see 3G usage taking off as expected.
Mumbai-based Idea in 2010 paid INR57.69 billion ($1.04 billion, based on current exchange rate) to the government for bandwidth and licenses to offer 3G services in 11 of India’s 22 telecom service areas. It launched 3G services in March 2011, and had 2.6 million 3G users as of March 31.
The company said its 3G users on average contributed INR91 more to its revenue per user than others in the quarter ended March 31.
Its average revenue per user in the past quarter was INR160, compared with INR159 in the previous three months.