Reliance Jio, India’s largest telecom operator, is well on its way to reaching the 500 million users milestone. While the subscriber base is rapidly growing, its average revenue per user (ARPU) growth seems to be stunted. Over the last four quarters, the ARPU growth has been (for lack of a better word), poor. Jio wouldn’t mind too much because its overall revenues and net income are rising. However, as the telco looks to get listed in the stock exchanges in the future, its ARPU will be in the eyes of potential investors.
ARPU is an important metric to determine whether the company can sell or upsell its services to customers at a healthy price (standard to the industry). Jio, which is not charging anything extra for 5G at the moment, has not been able to earn extensively more through its 4G services. With over 108 million 5G users, once Jio starts charging for 5G, it will see an uptick in the ARPU and overall revenues.
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Airtel, a fierce competitor of Jio, is also not charging anything extra for 5G, but its ARPU growth has been much healthier. Airtel’s mobile plans are priced at a slight premium to Jio’s plans. We have talked about this before, Jio looks to play more at a larger scale while Airtel wants to play at a higher premium.
Reliance Jio would be looking forward to the tariff hike that is expected after the general elections. The telecom operator’s ARPU was Rs 178.8 at the end of Q4 FY23, and it was only able to reach Rs 181.7 at the end of Q4 FY24. In fact, in the Q3 and Q4 of FY24, the ARPU has remained at a constant Rs 181.7. This means that the additional income that Jio is generating through subscribers is only because it was able to add more active users.
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Two things that will contribute to a higher ARPU for Jio in the near future are – a) mobile tariff hikes after the election, and b) Charging a slight premium for access to the 5G network.
