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 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.