Lately, we are seeing telecom companies cutting voice and SMS rates in an attempt to keep up with one another. The main focus in these rate cuts is to ensure that they maintain (or increase?) their market share. The rates are now being calculated in paisa per second for voice and one paisa for one SMS message. Coming from the consumer side these are best times to be using cellular phone for communication. To me, pricing these services in terms of paisa and seconds means this is practically free, relative to what a rupee can buy in today’s market. More so, when you start thinking about the capital expenditure in developing these communication networks and licensing fees involved.
As an investor, I believe these telecom companies are digging their own grave. These do not seem to make any economic sense. You will not find Rs 5 cutting tea on the roadside, but you can use a high tech wireless communication network for 30 minutes for less than Rs 5. Something is missing here. The rates for making calls were already among the lowest in the world. Now, this mad race will bring it down further, and will perhaps make them the lowest in the world. I am passing few of the publicly traded companies through my stock screen to see if it generates interest in me.