Reliance Jio’s low average revenue per user (ARPU) figure is a concern over the long term. Jio likes to play on large scales and keep its profits marginal from each user. Because of this, the telco’s ARPU is considerably less than that of its top competitor Bharti Airtel. Yes, even with marginal profits from individual users, the telco’s total volume of profits is quite high. Jio has been able to manage its market standing at the top because of the number of 4G subscribers it has. But even with this, if the telco’s ARPU don’t see a gain, its profits should ideally start narrowing. The larger concern here is that the investments with 5G and further enhancements for 4G will require more and more money and if there’s even a slight choke in the subscribers addition or if the ARPU falls down even further, it will negatively impact the company.
Reliance Jio Can Do This to Raise ARPU
The thing is simple - tariff hikes. This move from the telco will not only help Vodafone Idea, but the entire industry. It will further allow the telcos to offer better services since they will be able to make more investments in the network if they are earning more.
The return on investment for the telecom industry in India at the moment is quite low. One of the reasons for that is low tariffs. Jio has made the statement it had to with gaining the largest subscriber market share in the industry. But this has happened at the cost of the ARPU for the industry.
Sunil Bharti Mittal, Chairman, Bharti Enterprises has already said that the ARPU of the industry must retune to Rs 200 levels to help it sustain itself over the long term. With 5G on the way, the telcos will have to invest more in both the infrastructure at the ground level as well as the spectrum which will not be cheap. Jio’s low ARPU has been a low-key concern for well-wishers of the company. Hopefully, with 5G and tariff raise, it will change.
