Reliance Jio’s move to revise tariff plans is aimed at improving its average revenue per user (ARPU), which is a positive for the telecom industry, ICRA said on Wednesday, adding that the pricing by Jio indicates some easing of pressure on ARPU while the competitive intensity of the industry would remain high.
“Although the plans continue to remain attractive for the subscribers, they directionally point to ARPU improvement. As ICRA anticipated earlier, the ARPU levels of the industry would have to improve to sustain the sizeable debt levels and improve return on investments. After amassing more than 100 million subscribers, RJio is now focusing on pushing up the ARPU to improve its profitability,” Harsh Jagnani, Sector Head and Vice President, Corporate Ratings, ICRA said in a statement.
Reliance Jio on Tuesday announced a new revised plan that will come into effect post the expiry of the Dhan Dhana Dhan plan which had become effective since April 2017 and would be ending in mid-July for most subscribers. ICRA said that Jio’s new plans are attractively priced and would keep the competitive intensity for the industry elevated.
Jio started with offering free data and voice services till March 31, 2017, post which it launched new plans. The most prominent plan announced by the company was for Rs. 309, which offered its subscribers 1 GB per day of data for 84 days. This translated into an ARPU of Rs. 96 for the three months. These plans were offered to consolidate the healthy subscriber base which the company had amassed during its free offer period.
Now, post the completion of the three-month period of the above-said offer, Jio has come out with another set of attractive plans. The most prominent plan now is for Rs. 399 which offers 1 GB per day of 4G data and unlimited calling for 84 days, which translates into ARPU of Rs. 124. “Thus the new plan points towards an uptick in ARPU, although it remain lower than prevailing industry ARPU,” ICRA said.
Bharti Airtel reported ARPU of Rs. 158 for Q4FY2017, Vodafone reported Rs. 142 and Idea Cellular reported Rs 142 ARPU.
After adding 79.7 million active subscribers by March 2017 (against total reported subscriber base of 108.7 million), the active subscriber addition of Jio had slowed to 0.37 million in April as it had started charging for the services. It now appears that RJio is moving to a balanced approach between subscriber addition and revenue growth.
Bank of America-Merrill Lynch, in its recent report, said that Reliance Jio’s move to completely end free 4G services is expected to enable incumbents Bharti Airel and Idea Cellular to contain a sequential fall in revenue in the first quarter of this financial year. However, the brokerage added that revenue growth for these incumbents ould still be some quarters away.