ICICI Securities in a report on Wednesday said that the new postpaid tariffs unveiled by Reliance Jio on Tuesday will have “multiple ramifications” for Reliance Jio as well incumbents. According to the firm, the plans unveiled by Reliance Jio, while offered at similar level of tariff as incumbents, largely have the benefits of three major over-the-top (OTT) platforms. Reliance Jio, the largest telecom operator in India on Tuesday unveiled JioPostpaid Plus plans in multiple tiers in the range of Rs 399 to Rs 1499. The JioPostpaid Plus plans offer an array of benefits including a complimentary access to Netflix Mobile subscription, Amazon Prime membership and Disney+ Hotstar VIP subscription.
Further, the base JioPostpaid Plus tariff priced at Rs 399 is 20% cheaper than the base tariff offered by Airtel with identical data benefits.
“We see the offering having potential to drive at least some churn from incumbents, unless they match the OTT offers,” ICICI Securities said in its report on Wednesday. “Matching of the offering, on the other hand, could result in additional annual costs to Airtel and Vodafone Idea (VIL).”
The firm said that a “large chunk” of connections in the postpaid segment “is driven by corporate connections” across the country.
“Thus, response of non-corporate segment will be key to churn,” ICICI Securities said in its report.
The Telecom Regulatory Authority of India (Trai) in a report highlighted that the prepaid services accounted for 95.35% of the total connections for the quarter ended March 31, 2020. The report released by Trai in mid-September also highlights that the average revenue per user (ARPU) in the prepaid segment hit Rs 84 during the quarter ended March, 2020. However, Trai said that the postpaid segment registered an ARPU of Rs 244 for the quarter ended March, 2020.
CLSA, a capital market and investment group in a research note highlighted that the postpaid subscribers are “key to operators’ ARPU.” The firm said that the ARPU growth in the segment “presents opportunities” for Airtel, Vodafone Idea and Reliance Jio.
Crucially, CLSA said that the incumbents can match the offers provided by Reliance Jio as the OTT benefits offered by the largest telecom operator in India are largely restricted to single screen.
ICICI Securities also highlighted that Vodafone Idea and Airtel already offer Amazon prime one year subscription with the postpaid connections. However, the firm said that the Airtel and Vodafone Idea will have to make “incremental spending” for Netflix and Disney+ Hotstar VIP subscription.