Reliance Jio ARPU Will Increase After Introduction of Bundled IUC Minutes Plans: Analysts

Reliance Jio has recently introduced prepaid plans and the IUC cost for its subscribers. These prepaid plans are expected to increased ARPU and operating cost for the company

Highlights
  • Reliance Jio has removed low-paying recharge plans
  • The telco has introduced plans with 1,000 IUC minutes
  • The ARPU of the company currently stands at Rs 120 per user per month

The new introduction of the IUC based recharge plans for Reliance Jio subscribers is likely to be a game-changer for the company. Although on a first look, it could seem as if the introduction of IUC based recharges could mean a loss of subscribers for the Mukesh Ambani led telecom operator, but on the business side of things, the company is surely going to see an increase in revenue. It would only save on its expenses which was making as IUC payouts, but it would also up the average revenue per user (ARPU) of the company. As per an ET Telecom report, analysts have pointed out that the introduction of the simple tariff plans with extra IUC minutes will help the telecom operator in increasing its ARPU by a 10%. This would happen through the fourth quarter of the fiscal year, as per the analysts.

reliance-jio-arpu

Reliance Jio Withdraws Low-Value Prepaid Plans

Also, this won’t be the only way, Reliance Jio would be improving its ARPU, but the analysts are of the thought that the telecom operator will keep on tweaking its prepaid plans to raise its floor pricing for better revenue. For example, Reliance Jio recently did away with two of its lowest-priced sachet packs of Rs 19 and Rs 52. This is a hint from Reliance Jio about moving to higher-priced plans, and a path towards increased revenue and ARPU as it continues to make changes in its prepaid plans. There are also expectations in the sector that Reliance Jio could make more changes to its prepaid plans in this direction as it completes the acquisition of 400 million customers.

Nitin Soni from Fitch, said about this, “Jio’s decision to recover IUC is a clear monetisation signal, and we estimate its average revenue per user (ARPU) increasing at least 5% by the March quarter, also driven by its simpler tariff plans with more off-net IUC minutes along with its decision to withdraw two low-value prepaid plans.” Soni also added to his words that he expects the telecom operator to keep increasing floor rates in the coming months with similar withdrawals of the low priced plans.

Reliance Jio ARPU Finally to Start Climbing Back

The tracking of the Reliance Jio ARPU shows that the telecom operator was witnessing a decline on that front, as the ARPU fell of the seventh consecutive quarter for the telco as highlighted by its quarterly earnings report, a few days back. In the July-September quarter, Reliance Jio’s ARPU came to stand at Rs 120, a figure which is lower than all the other telecom operators in the industry. While the other rival telcos continued to add more high paying subscribers and increased their ticket size by introducing the minimum recharge plans, Reliance Jio’ addition of the low paying customers through the selling of JioPhone and small recharges continued to affect the company ARPU.

New IUC Minutes Recharge to Help Reliance Jio

Reliance Jio has recently launched Rs 222, Rs 444, Rs 333 and Rs 555 prepaid plans which come with various validity options and bundle data, but most importantly they offer 1,000 IUC minutes to the subscribers which would have cost them Rs 80 if they’d have purchased them separately.

Soni of Fitch has also said that in the short term, Vodafone Idea and Bharti Airtel are unlikely to risk a tariff hike as both the telecom operators are losing subscribers. On the other hand, analysts are of the general view that the move by Reliance Jio is largely going to be helpful, as it will help increase the operating income for the company. Whereas, if the shift to the zero-IUC regime happens, then the telecom operator’s IUC payouts would eventually fall to zero.

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Chakri is a go-to guy for your next smartphone recommendation. Back in his engineering days, he used to play with smartphones by installing custom ROMs and that passion got him into the tech industry. He still goes nuts about a smartphone knocking his door for review. Currently managing everything at Telecom Talk, Chakri is trying to master PUBG Mobile in his free time.

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Vishal | ChennaiGirish Gowda | BengaLuruKiran Fernandes | GoaAniruddha Dhar|Santragachi|West BengalNikhil Recent comment authors
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tri_vis
tri_vis

Remember my comment, ( posted Many times)
Rs. 303 original plan introduced by Jio??
Within 2 years that will come back.

Aniruddha Dhar|Santragachi|West Bengal
Aniruddha Dhar|Santragachi|West Bengal

Doesn’t matter. But give bulk 30gb data at Rs 300 for 28 days. Will be selling like hotcakes.

Nikhil
Nikhil

Load will reduce due to this?

Aniruddha Dhar|Santragachi|West Bengal
Aniruddha Dhar|Santragachi|West Bengal

Yes to a certain extent I think because for this daily data quota people are encouraged to finish their quota by any means (watching useless videos at high resolution) thereby increasing load on the network.

If 30gb bulk data is given then those people would spend their data judiciously like keeping the resolution to a comparatively lower(in mobile 480p is enough i think for clear video) level and keep a check on their usage. So overall load on network especially in peak hrs would come down.

Nikhil
Nikhil

Usage per month across all four operators don’t cross 15GB on an average. I doubt people are using full daily quota. All postpaid customers use 15-25GB from allotted 40GB on VIL and 30GB at the most from 75GB on Airtel.

How much you use? I use 500MB-800MB daily.

Aniruddha Dhar|Santragachi|West Bengal
Aniruddha Dhar|Santragachi|West Bengal

Before February 2019 I couldn’t use 50% of the daily quota but now with those small cells installed nearby my house I can almost use total quota everyday. 2gb is nothing if you watch videos at 1080p resolution.

People return from work at evening and start watching videos of their choice that’s why between 7 to 11pm we face congestion everyday at most places. But small cells now maintain data speed here between 5 to 25mbps all day long. It’s a huge variance because of the congestion at evening time.

Vishal | Chennai
Vishal | Chennai

@nikhil yes gb per day concept forces users to use data else it will go waste. If bulk data given we can use it at any point of time.

Kiran Fernandes | Goa
Kiran Fernandes | Goa

I liked the 999 plan because they gave bulk 90gb data. But then they reduced it back to 60gb and it’s too costly right now. If by chance they increase it back to 90GB or more, I’ll take it in a heartbeat. We all need bulk data for a month. Daily data is horrible.

karthik
karthik

Soon we will see the Wipe out of 1.5 Gb a day plan by JIO(As i already said) after people get use to new plans . May be 1699 will remain same as they will lock the users for a year time. They may offer some IUC minutes with this long term plan(May be increasing the price by some margin of 250).

And i am sure to those who recharged with 1 year plan before 10th of this month are the non affected people of the price hike.(Especially those who recharged between 1 to 9 of this month)

City
Mysore
Operator
JIO , Airtel
Kiran Fernandes | Goa
Kiran Fernandes | Goa

Now all plans will start at 2GB a day, and they’ll get a price bump. Jio is tryina recover the 13k crore in the next 2 months. I hope it’s worth it, and he buys a gigantic chunk of spectrum in the auctions.

Nikhil
Nikhil

40Mhz in band 40,20Mhz in band 3 and 15Mhz in band 5 doesn’t make sense to cater the demand for ever increasing OTT content.

Vishal | Chennai
Vishal | Chennai

@kiran buying spectrum is ok but where is that gigantic amount of spectrum ?

Kiran Fernandes | Goa
Kiran Fernandes | Goa

What I meant was, Jio should buy a huge chunk of whatever is available.
You know, 10MHz where they got 30MHz in b40,
20MHz where they got 20MHz in b40
15MHz in band 5 wherever they can get it, and finally make sure they can top up band 3 to get 20MHz pan India.

Vishal | Chennai
Vishal | Chennai

Competition will be for band 3, 40 between Jio and Airtel.

Kiran Fernandes | Goa
Kiran Fernandes | Goa

Yeah let’s see. I’m tired of waiting for the auctions, I wish it was here already.

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