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Last Updated : Dec 26, 2014 12:42 PM IST | Source: Moneycontrol.com

Why is it risky for Bharti Airtel to charge for VoIP?

Calling it 'unexpected, bold and risky move' Kotak has a neutral rating on the stock. It also feels that such a move opens up the possibility of an existing or a new competitor to use this as a fairly strong competitive differentiation plank.

 
 
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Moneycontrol Bureau


Shares of Bharti Airtel fell over 1 percent intraday on Friday as analysts raise concern about charging of Voice over IP services (VoIP). The telecom company will soon start charging users extra money for using services such as Skype as Indian operators look to boost their data network and revenues.


According to the company, internet or data plans that give customers discounted rates will only be valid for internet browsing and will exclude VoIP.

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VoIP services include those such as Skype, Line and Viber that typically let users make free calls through the internet. The charges will only apply to pre-paid customers and will be implemented soon.


Calling it ‘unexpected, bold and risky move’ Kotak has a neutral rating on the stock. It also feels that such a move opens up the possibility of an existing or a new competitor to use this as a fairly strong competitive differentiation plank. However, it adds that the intent clearly appears to be to make VoIP calling expensive versus legacy calls in a bid to mitigate the risk of voice revenue cannibalization without raising data pack rates.


Here is why it’s a risky move for Bharti Airtel as Kotak points out:



  1. Within a few hours of Bharti making this fine print change, there is a good amount of customer outrage on social media. Unless other operators (especially Vodafone and Idea) follow Bharti on this move, it has the potential to be counterproductive.

  2. It opens a meaningful differentiation proposition for competitors, extant and new, who may choose not to follow Bharti’s VoIP pricing strategy. Bharti’s move provides visibility to the aspect and makes it potentially powerful ‘marketing material’.

  3. It signals a defensive mindset where Bharti is pretty much accepting the threat of revenue cannibalisation from over-the-top (OTT) voice.


At 12:35 hrs Bharti Airtel was quoting at Rs 353.25, down Rs 0.95, or 0.27 percent.

First Published on Dec 26, 2014 12:42 pm
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