Reliance JioPhone Promotional Offer Will Help it Gain 2G Subscribers from Rival Telcos: Analysts

Reliance Jio’s ARPU to Take a Hit While Subscribers Rise

Varun Ahuja and Viral Shah of Credit Suisse have also remarked that the recent move by Reliance Jio has stalled the hopes of tariff increase by the telecom operator, as the company currently stays in the “grab” phase. By this, the analysts mean that while many expect Reliance Jio to raise tariffs in an attempt to increase its ARPU, the telecom operator is still eyeing a massive subscriber base thus keeping ARPU aside and letting the tariff rates persist as they are. It also cannot be dismissed that moves like this are going to negatively affect the telecom operator’s ARPU, which has gone down consecutively for six quarters, including the last April-June period as well. The analysts note that this is because of the fact that consumers who move from 2G services to 4G services initially opt for lower tariff plans until they are ready to move up the ladder to higher-priced plans for more data and services.

Reliance Jio ARPU Drops Low to Rs 122

Choksey, MD at KR Choksey Investment Managers, said “This is a smart strategy to acquire new customers. In the next few quarters, there will be an ARPU drop but a company looks at long term and sustainability,” he further added, “Jio is well-positioned because these customers will move onto higher tariff plans as they consume more data, and later on when broadband is offered, there will be more takers.”

The telecom operator’s average revenue per user remains at Rs 122 and in such a time where other rival telcos, Bharti Airtel and Vodafone Idea have managed to push their ARPU figures upwards with the help of changes in their postpaid portfolio and minimum recharge plans in the prepaid sector. Bharti Airtel which used to have a lower ARPU now boasts of Rs 129. With this new offer, Reliance Jio plans to dominate the feature phone market, which comprises 48% of the total mobile phone market in India.