The newly formed alliance between Tata Teleservices and Virgin Mobile is offering services which are around 25-30% cheaper as compared to similar offers by GSM operators, says a report from Morgan Stanley.

“Comparing the tariffs with Rs 200 card of Bharti, the leading wireless operator, reveals that Virgin’s plan is 25-30% cheaper, i.e., for the same price, the consumer could make outgoing calls for 140 minutes as against 85 minutes in Bharti’s plan,” says the report.

According to the report the Rs.200 tariff plan offered by Virgin will add to the ARPU of Tata Teleservices as it did not had any plans to target this segment.

“We find it innovative because under the plan, incoming is rewarded – which may lure consumers. In reality, it is costlier per minute than the average Revenue Per Minute (RPM) of Rs 0.75-0.8 for India based on last quarter results. This leads us to believe it is not disruptive. We do not expect Tata Teleservices to be in competition with Virgin Mobile due to product differenciation,” the report adds.

GSM operators are already gearing up to counter the challenge and are expected to unleash another tariff war.