Bharti says price war temporary; to outsource more

By Devidutta Tripathy

NEW DELHI (Reuters) - The price war between Indian mobile operators, which has slashed call charges to around 1.3 U.S. cents a minute, will not last, the chief executive of Bharti Airtel said on Monday.

Still Bharti, which has more than 110 million mobile users, would look to cut costs through outsourcing to protect its margins, Manoj Kohli said.

The mobile industry is going through a phase of intense competition, with firms cutting charges to as low a 1 paise per second (approximately 1.3 U.S. cents per minute) to grab customers ahead of launches by four new operators.

"This price situation, we believe, is a short-term situation because new operators and present loss-making operators may not be able to continue with this kind of low price," Kohli told reporters at a World Economic Forum event in the Indian capital.

The per-second billing war, which Bharti joined at the end of October, was kicked off by the success of sixth-ranked Tata Teleservices' plan for its news GSM service.

Tata, partnered by Japan's NTT DoCoMo signed up a market-leading 4 million customers in September, while Bharti signed up 2.51 million users, its lowest new additions in about 1-1/2 years.

Kohli saw the industry's average revenue per user (ARPU) falling as more customers from rural areas were signed up, and said Bharti would protect margins by cutting costs.

"Price per minute today is going down, but we are ensuring that the cost per minute also goes down," he said.