Airtel: Pricing in the Cannibalisation Era and Transition to Data
Bharti Airtel, the Indian and global telecommunications player, is witnessing challenging times. As the market leader, Airtel experienced a shift from voice to data since its revenue from the latter was seen to be proliferating. This move was short lived as the new entrant Reliance Jio changed the landscape of the Indian Telecom Industry. It offered free voice services and competitive tariff plans. With Jio, the blend (data+voice) average revenue per user declined due to low data tariffs and voice cannibalisation by data. Airtel suddenly faced pressure to retain its position as well as postulate a pricing plan to protect its revenue. This case revolves around the future pricing strategy to be adopted by Airtel to retain its market share and come up with a pricing plan to counter the Jio effect of "free" voice calls. The crux is how a market leader develops and implements a pricing strategy to counter the entry of a behemoth competitor that has rock bottom prices, in a context, where the eventual front-runner will cannibalise its main revenue source.