Reliance Jio Won’t Be Too Keen to Hike Tariffs Amid Less User Additions

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Reliance Jio, India’s leading telecom operator, might not be too keen to increase tariffs owing to lower net user additions in the previous quarters. Even though the telco's tariffs were 7-20% lesser than that of Bharti Airtel, it did not add many users during the October-December period in 2020. The increasing subscribers churn rate is directly impacting the net users' addition of the telco. This is why the telco is expected to deter from increasing tariffs of its offerings according to brokerage Jefferies. For getting more details on the story, keep reading ahead.

Reliance Jio’s Decreasing Trend in Net Users Addition

Jio is facing a decreasing trend in net users addition. In the June 2020 quarter, the telco added 10 million net users followed by 7.3 million in the September 2020 quarter, and then 5.2 million in the December 2020 quarter. The subscriber churn rate for the telco increased from 0.46% in June 2020 quarter to 1.69% in the December 2020 quarter.

To counter this situation, analysts believe that Jio will quickly introduce its low-cost Android smartphone in partnership with Google. This move would allow the telco to retain its JioPhone users. It is worth noting that the subscriber churn rate might increase further for the telco as between 8 to 10 million JioPhone contracts are bound to expire this quarter.

The loss by Jio is a gain for the second largest telecom operator of the country, Bharti Airtel. In comparison to Airtel, Jio is adding very few new 4G subscribers. Jio has said that the reason behind fewer users addition is partly COVID-19 pandemic and partly the ‘malicious and motivated campaigns’ against the telco in some parts of the country.

Even though the telco didn’t add many users, its financial reports still reflected approximately 16% on-quarter increase in net profits to Rs 3,291 crore in the December quarter. This was helped by the strong average revenue per user (ARPU) growth.

In terms of total subscribers, Jio is still plenty ahead of the other telecom operators in the country. It had over 441 million subscribers at the end of December 2020 compared with Airtel’s 293.74 million users and Vodafone Idea’s (Vi’s) 271 million users.

Another thing which has been really good for Jio is its growth in ARPU. The telco reported the ARPU to be Rs 151, which is its highest in the last 12 quarters. However, Axis Capital believes that the ARPU for Jio will come down from Rs 151 because there are no interconnection usage charges (IUC) anymore.

Do you think Jio will increase the tariffs despite increasing churn rate in net users additions? Leave your thoughts on the comments section below.

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