Reliance Communications has launched two add-on plans for SMS in both pre-paid and post-paid categories. One plan brings down the price of SMS (local/STD/roaming) to Rs0.01 per SMS for monthly rental of Rs11. The other plan allows unlimited SMS for Rs30/25 per month (Re 1 per day).
RCOM derives less than 1.5% of its mobile revenues from SMS as compared to ~4-5% for Bharti and ~5% for Idea. We believe that the current move would not have any significant negative impact on RCOM – it might even be positive for RCOM as lower price might lead to significantly higher usage of SMS.
Bharti and Idea would have higher negative impact given their relatively higher exposure to SMS if they match RCOM’s SMS plan but not significant on an absolute basis in our view.
We expect Bharti/Idea/Vodafone to launch similar plans with variations in monthly rentals to minimize the impact on financials.