Andy Mukherjee is a Bloomberg Gadfly columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.

India's reigning telecom tycoons, Sunil Bharti Mittal and Kumar Mangalam Birla, couldn't possibly be more satisfied. Or more nervous.

Mittal's Bharti Airtel just finished its financial year with 120 billion rupees ($1.8 billion) in revenue from data, a near-threefold increase in two years. Birla's Idea Cellular matched that growth rate and reported 69 billion rupees in annual sales from data plans.

Better still, it appears Indian wireless customers are only now warming up to video downloads and WhatsApp chats. Average data use per subscriber is barely a fifth of the amount in Malaysia and Thailand, and a 10th of Hong Kong and South Korea.

Yet Mittal and Birla have reasons to be apprehensive. Growth in the data business is being made possible by discounts, which will continue to get deeper. Nobody has a clue when the hyper-competitive industry will reach stability and at what price point.

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Indian telecom companies' data business is growing -- but with deep price cuts
Source: Company websites

Then there are the billionaire Ambani brothers. Mukesh Ambani's new fourth-generation wireless service -- Reliance Jio -- will start later this year, presumably with highly competitive price plans. (Jio, though, has publicly said it's not interested in a price war.) Meanwhile, younger brother Anil, whose Reliance Communications will share spectrum and infrastructure with Jio, has come out with a promotional upgrade offer for existing customers that throws in 10 gigabytes of 4G data for roughly half the price at which competitors currently sell about 750 megabytes, according to brokerage Religare.

Assume that competition from the Ambani siblings causes data prices to drop by a third this year. If Bharti and Idea can still keep expanding at the same rate as now, they will take in combined data revenue of $3 billion, a much-reduced 4 percent annual pace of growth. If the price war leads customers to defect to the Ambani camp, slowing down data usage on the network of Mittal and Birla by a third, their revenues would stall. That scenario may not be likely, but it still serves to illustrate what could go wrong.

This Party May Not Last
Investors are betting price competition in Indian wireless will remain manageable
Source: Bloomberg

Investors are ignoring that risk for now. The 24 percent recovery in Bharti Airtel shares since their January trough suggests investors believe Mittal is well prepared to see off the Ambani challenge. If the pricing war turns brutal, that optimism could easily fade.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Andy Mukherjee in Singapore at

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Matthew Brooker at