Sunny Sphere

I don’t understand why the whole mobile phone industry and the stock market is reacting so much to the 1 paisa per second plan…

To the layman, no great statistics are needed to prove that this is not probably such a great loss to telecom revenues.

Prior to the introduction of this plan, the telecom rates were mostly around 40 paisa (or in some cases 30 paisa) per second – all you needed to do was to add an additional Top up to reduce the call rate from Rs 1 per second to this rate

(In the case of Airtel, even this top up rate has been coming down steadily – in Jan 2009, I paid Rs 84 per month for this, in April this was Rs 64 per month, in August I paid Rs 160 for 3 months and I’ve seen messages later which were offering this rate for almost nothing).

Let us consider someone just making a lot of local or within the state calls:

Current rate: Either 40 paisa or 30 paisa per minute
New plan: 1 paisa per second

Here are a few examples:

Call Duration: 10 seconds
Current Rate: Either 40 or 30 paisa
New Plan: 10 paisa

Call duration: 30 seconds
Current Rate: Either 40 or 30 paisa
New Plan: 30 paisa

Call duration : 60 seconds
Current Rate: Either 40 or 30 paisa
New Plan: 60 paisa

Any call over 60 seconds ….say 3 min, 5 min, 10 min
Current Rate: Either 1.2, 2 or 4 Rs – or 0.9, 1.5 or 3 Rs
New Plan: 1.8, 3 or 6 Rs

So, anyone can clearly say that the telecom providers are going to make a significantly higher exponential revenue than they were making with the older plans by introducing this per second plan – only if the call duration is less than 40 (or 30) seconds, does the revenue actually go down compared to what it was earlier.
So, how many short calls of 1 minute or lesser do people actually make? We are a nation of people who can’t have enough of the mobile phone, are we not? And that too…for local calls…where a whole network of family and friends is always on call

I’m referring to local or within the state calls only above.

It could possibly lead to a dent in revenue in the long distance calling (out of state) though.

In the case of the STD calls the lean in the new plan is towards 1.2 paisa per minute.

STD calls were mostly in the range of Rs 1.5 per minute (or sometimes Rs 1 based on the top up) – so it could possibly lead to a 50% decline in revenues (or lesser) from this segment. Won’t some of that be compensated by bigger volumes?

I see that most Indians still stick to their home states (atleast I hardly call anyone outside my state and I see the same amongst most of my friends), I would like to see some statistics on how much revenue local calls bring in versus STD calls before passing a verdict on this plan.

However, I can’t see why the so-called famous and well acclaimed analysts are beating down the stocks of some of these valuable companies on the grounds of a tariff war – a great money making tactic for the investors isn’t it – bring down the stock value, invest at the low level and reap the profits by pushing up the stock value again…..what say?