New Delhi, April 28: After a price war over local phone calls, it’s now time for some action on long-distance rates.

Bharti Airtel today slashed STD calls and roaming tariffs by up to 43 per cent for any network. The rates are applicable on calls made to any landline or mobile phone in the country.

To counter the offer, Reliance Communications announced an “unlimited free STD call” package, which allows a customer to make unlimited long-distance calls to any other Reliance number for a fixed monthly rental.

Last year, mobile firms had fought to reduce local call rates to a minimum of Re 1 per minute. The battle was launched by BSNL, but others soon followed suit.

Reliance had gone a step ahead to offer unlimited free local calls on its own network.

Bharti Airtel president and CEO Manoj Kohli said: “More than 80 per cent of users switch off their phones while on roaming as they feel the incoming rates are very high. Moreover, close to 70 per cent of STD users in India do not use this facility for more than five minutes a month... We plan to reverse the trend with this reduction.”

Kohli added that any revenue loss because of the lowering of rates would be offset by the rise in volume, adding “this initiative will particularly benefit rural customers”.

Other players such as Vodafone, BSNL, Tata and Idea have not reacted as yet, but sources said most firms would be forced to join the price war soon.

A Vodafone Essar spokesperson said: “We will offer customers the best value possible.”

According to Airtel’s new tariff plan, STD rates have been reduced by 43.39 per cent to Re 1.50 minute from the earlier Re 2.65 per minute.

Roaming charges for incoming calls will be cut to Re 1 per minute from the present Rs 1.75 per minute, a reduction of 42.85 per cent. Moreover, Airtel customers, while on roaming, will be able to make local calls at Re 1 per minute and STD calls at Re 1.50 per minute.

While the Reliance plan is applicable with immediate effect, Airtel’s tariff plan will be offered from April 30.

According to the Reliance plan, a post paid customer has to pay a monthly rental of Rs 440, while a pre-paid customer will be charged a rental of Rs 496 to make unlimited long distance calls to any other Reliance number.

However, there is no added monthly fee for Airtel's new tariff plans.

“The tariff war has resulted in a win-win situation for the customer; the telecom firms will lose out on revenue. The Rs 2.60 per minute calls accounted for 40 to 50 per cent of Bharti’s business. But there’s a bigger fight going on - and that is for subscriber growth. That won’t happen unless call rates are slashed,” says a telecom analyst with Batliwala and Karnani Securities.

“The move to cut rates is also designed to pre-empt a similar move by newcomers who are waiting in the wings. The tariff war has begun and will hot up as more players enter the market,” he added.

The growth in new cellphone connections had slowed to 40 per cent in April-February 2007-08 from the level of 90.3 per cent in the year ago period.

Analysts said the move to reduce STD tariffs had been triggered partly by the abolition of the access deficit charge and partly to combat the aggressive pricing stance taken by newcomer Virgin Mobile.

The telecom regulatory authority of India had also been asking operators to reduce roaming rates.