Reliance Jio’s Move to Slash Tariff Will Delay Incumbent Telcos’ ARPU Recovery: Ind-Ra

Reliance Jio Infocomm’s recent move to cut tariffs will delay the prospects of a recovery in incumbents’ average revenue per user (ARPU) levels, according to India Ratings and Research (Ind-Ra). The Mukesh Ambani-led telco had last week announced a Rs 50 cut in its existing plans and/or 50% more data per day on plans ranging from Rs199-498. India Ratings said that the price cut indicates pricing discipline may still be uncertain and highly dependent on consumer behaviour despite consolidation in the industry paving the way for long-term structural improvements.

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The agency said that India’s two large telecom operators had reported an ARPU decline of 25% on a yearly basis each for the second quarter of the ongoing fiscal.

On the other hand, the latest 4G player reported a higher ARPU of Rs 156 in the same quarter as compared to the Rs84 recorded for the industry for the period. Notably, Jio’s entire customer base comprises broadband data subscribers.

Meanwhile, broadband data subscribers constitute only 20% of the customer bases of other large telecoms. Non-broadband subscribers are typically low ARPU-generating customers.

According to Ind-Ra, top telecos would focus more on increasing their subscriber market share than revenue market share during 2018, and the dual sim phenomenon would continue for longer-than-expected, given low customer loyalty and high price sensitivity. “Thus, the industry pricing trend is moving towards competitive pricing on long validity plans (70-90 days) to increase customer stickiness,” the agency added.

Although current competitive tariffs do not seem sustainable, the short-term outlook for the ARPU remains subdued, thus indicating another tough year for the telecom sector, India Ratings said.

Due to mounting pricing pressure, debt burden and capital outlay need to be led to the exit of small telecoms from the market like Telenor, Sistema, Tata Teleservices and Reliance Communications.

On the other hand, large telcos have prepared themselves for the continued challenging environment via asset monetisation, which emerged as a key credit theme in 2017, besides industry consolidation.

“RJio increased pricing by 40% in October 2017. Thereafter, it reduced the validity on the Rs 309 plan to 49 days from 84 days. However, it has announced cashback offers to ensure customer stickiness,” it explained.

Ind-Ra said that it previously expected a recovery in ARPU in mid-to-late FY19 in view of a likely stabilisation of industry tariffs at a higher level that would have led to user SIM consolidation.

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7 Comments on "Reliance Jio’s Move to Slash Tariff Will Delay Incumbent Telcos’ ARPU Recovery: Ind-Ra"

 

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bsnl
January 11, 2018 12:19 am 12:19 AM

does jio smart coverage map stooped? need to find nearest jio tower

Ankit Jain
January 10, 2018 12:38 pm 12:38 PM

Airtel’s was not ARPU, it was ALPU (Average loot per User) ??

Debu
January 10, 2018 4:19 pm 4:19 PM

Laughed after reading your comment 😀

Speed
January 10, 2018 9:37 am 9:37 AM

Lets discuss buddy’s

How much costs jio’s PRIME MEMBERS SHIP will be..
In 2018

bsnl
January 10, 2018 1:55 pm 1:55 PM

main thing
if person dont do recharge,what will happen to his plans?

Aman K
January 10, 2018 3:53 pm 3:53 PM

It will expire after 90days as per normal TRAI rules.

And if talking about the membership plan, they might be preparing some exciting offers that may come in March.

Pro tip – Always recharge for not more than 3montgs for Jio, as every three we see new offers coming from Jio along with different wallet offers.

So enjoy and wallet offers till they offer such great pricing.

bsnl
January 10, 2018 11:59 pm 11:59 PM

if prime membershp ends in march and I done recharge till april end,g;even cc in jio dont know what will happen

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