TRAI chairman says tariff war among telecom companies will end in three years

We are in the midst of a price war among the telecom companies for the call rates, and it has taken its toll on the telecom companies and their margins. The regulatory authority TRAI says the tariff war may come to an end within 3-5 years. 

"Next 3 to 5 years, we are going to see industry margins are under pressure, companies going looking around for cash to tide them over liquidity crisis and three you are going to see consolidation," Telecom Regulatory Authority of India (TRAI) Chairman Rahul Khullar said while talking to media. 

The customers are being convinced with the help of freebies such as higher talk time for a lower price, in different ways. The TRAI Chairman said the tariff war as one of the main reasons for the mayhem in telecom industry. 

"The other thing which has very adversely effected them is this predatory pricing. Normally predatory prices refers to increase of price that troubles customers but here it is opposite. If one reduced tariff to 10 paisa other slashes it to 5 paisa. Another will reduce it to 1 paisa," he said. 

He believes such competition is spoiling the business environment in the country, is reducing profit margins and the situation is likely to continue for 2 to 3 years and will likely improve after that. "The point which I am trying to make is that rest of the world also sees competition. There are many industry where presence of 4 to 5 players increase competition, at some places 7. But view that 12 to 15 (players) are required for competition is nonsense," he said.

Source: http://cablequest.org/news/telecom-news/item/971-trai-chairman-says-tariff-war-among-telecom-companies-will-end-in-three-years.htmlSource: http://cablequest.org/news/telecom-news/item/971-trai-chairman-says-tariff-war-among-telecom-companies-will-end-in-three-years.html