Mahanagar Telephone Nigam Ltd.,the state-run company that provides telecommunication services in India's two largest cities, has cut the tariff for Internet usage on its third-generation network by about 70%, signaling a new wave of price war in the sector.
The price cut comes after market leader Bharti Airtel Ltd., second-ranked Reliance Communications Ltd. and Idea Cellular Ltd. slashed their rates by 62%-70% over the past few weeks to entice more people to use 3G services, which allow fast data transfer.
The price cuts are an attempt to boost revenue as demand stagnates for voice services and 3G services experience slow growth. But the development comes just when the industry was expecting an end to a price war in the second-generation segment that pulled down the profit margins of most telecom operators.
The intensity of competition in the 2G segment has eased in recent months following a Supreme Court order to cancel more than 120 telecom licenses that were issued in 2008, because of alleged corruption in their allotment. Although the affected companies can continue services at least until Sept. 7 and reapply for the permits, the order and resulting uncertainty in the sector have made most of them stop aggressive market-expansion programs.
MTNL launched its high-speed 3G services in January 2009, after paying 110.98 billion rupees to the government for bandwidth.
The company had 5.83 million telecom users as of March 31. It doesn't give a figure for 3G customers.
MTNL and the other state-run telecom company, Bharat Sanchar Nigam Ltd., got 3G bandwidth before the government sold spectrum to private operators in 2010 through an auction that fetched about 677.19 billion rupees.
The price cut comes after market leader Bharti Airtel Ltd., second-ranked Reliance Communications Ltd. and Idea Cellular Ltd. slashed their rates by 62%-70% over the past few weeks to entice more people to use 3G services, which allow fast data transfer.
The price cuts are an attempt to boost revenue as demand stagnates for voice services and 3G services experience slow growth. But the development comes just when the industry was expecting an end to a price war in the second-generation segment that pulled down the profit margins of most telecom operators.
The intensity of competition in the 2G segment has eased in recent months following a Supreme Court order to cancel more than 120 telecom licenses that were issued in 2008, because of alleged corruption in their allotment. Although the affected companies can continue services at least until Sept. 7 and reapply for the permits, the order and resulting uncertainty in the sector have made most of them stop aggressive market-expansion programs.
MTNL launched its high-speed 3G services in January 2009, after paying 110.98 billion rupees to the government for bandwidth.
The company had 5.83 million telecom users as of March 31. It doesn't give a figure for 3G customers.
MTNL and the other state-run telecom company, Bharat Sanchar Nigam Ltd., got 3G bandwidth before the government sold spectrum to private operators in 2010 through an auction that fetched about 677.19 billion rupees.