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Bharti Airtel Sees Mobile Tariff Cuts Limited

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Reuters India

Wed May 20, 2009 7:35pm IST

NEW DELHI (Reuters) - Bharti Airtel, India's top telecoms company, does not expect the entry of new players in an already competitive market to drastically push down mobile tariffs, its deputy CEO said.

Bharti, which has nearly 97 million mobile users and more than 100 million customers in total, will strive to keep costs low and gain more profitable users, Sanjay Kapoor told the Reuters Global Technology Summit in a telephone interview.

Tariffs as low as 1 U.S. cent a minute have helped Indian mobile operators add close to 15 million subscribers a month in the world's fastest-growing mobile market, but analysts are becoming cautious on the mobile firms' outlook as more low-paying rural users are straining their balance sheets.

"These tariffs are already down to the (lowest) in the world, the propensity to drop any further should be limited," Kapoor said.

Bharti Airtel, which said last week it was the third-largest single country operator in the world, competes with 10 others in an increasingly crowded Indian mobile market.

Analysts expect global players such as Telenor and Etisalat to start services in India this year, and the country will allow mobile number portability, which could put further pressure on tariffs.

FREE MINUTES "I don't think the cost structures of many companies, especially the new startups, will justify to bring the price down further from the price that exists in the markets. I mean if somebody wants to bleed ... that's different," Kapoor said.

Some of Bharti's competitors have reduced tariffs and have given away free minutes to lure new users, but Kapoor said this model was not sustainable.

He said Bharti would continue to focus on profitability rather than subscriber numbers, adding cost control was also key.

"For a country which sells minutes at 1.2 to 1.3 cents it is absolutely paramount to produce that minute at a much lesser price, otherwise this business will never be profitable," he said.

Expansion to rural areas constrains Indian telecoms firms to limit costs on networks, but Kapoor said his company's scale had given it greater flexibility to contain non-network costs that included spending on marketing and distribution.

Soaring pace of mobile subscriber additions has attracted many players to the Indian market, with the country set to have at least 15 operators by the end of this year, but Kapoor expected the firms to eventually consolidate.

"On a sustainable basis, finally this country will see five to six players emerging, of which the top three will be making money and the others, like the rest of the world, will be in the boarder line or will be on the other side of the line," he said.

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All along I have been saying this.

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Bharti expects tariff cuts!...but not drastic cuts

Edited by ravi_patent

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