Prices of Internet data plans offered by domestic telcos are expected to fall by "at least 15-20%" after the launch of Reliance Jio services in 2016, according to a global rating agency.
Reliance Jio, the launch of which is recently delayed to next fiscal year, is expected to pose competition to other telecom operators, as it likely to offer data plans at cheaper rates to gain market share, said Fitch Ratings.
"We expect competition to intensify as Reliance Jio, part of Reliance Industries, enters the market with likely cheaper and faster data-focussed tariff plans armed with sufficient spectrum and access to funds," Fitch Ratings said.
The rating agency expects the existing operators to roll out discounts and promotions to check high-value subscribers from opting out of their services.
The agency has revised down its outlook on the telecom sector to 'negative' from 'stable' for 2016, citing "pressure on credit profiles" of top-four telecom operators due to a rise in competition after Reliance Jio launch.
"We expect blended monthly average revenue per user (ARPU) to fall by 5-6 per cent to around Rs 160 (2015: Rs 170) due to a decline in data tariffs, which will more than offset the rise in data usage," Business Standard quoted Fitch, as saying.
Fitch estimates the industry revenue to post low single-digit increase next year, led largely by income from data services.
"Data's contribution to revenue will rise to around 25-27 per cent (2015: 18-20 per cent) as data traffic will double - aided by the proliferation of cheaper smartphones, lower data tariffs and improving content availability," it said.