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

Follow Us

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.

TAIPA




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.

Recent Comments

Faraz :

Does Bharti Hexacom provide Airtel 5G services in N.E and Rajasthan Or Both are offering 5G seperately ? Who bought…

Bharti Hexacom IPO Set for April 3, TCIL to Sell…

Faraz :

Nice.. & BSNL 60 Mbps is even perfect plan for many if there are more than 5 devices connected. Many…

BSNL 60 Mbps Plan is Likely One of the Best…

Faraz :

Budget phones have degraded more than any other budget phones since pandemic. They are still selling some craps like Helio…

POCO C61 to Launch on March 26, 2024

shivraj roy :

i feel Vi has improved than what it was in 2022 i usually get around 8-10mbps in very heavily dense…

5G Users Consuming 3.6 Times More Data than 4G Users…

biswadeepmondal :

JioAir Fiber is working very well in KPA & HLR. Sadly they don't have any data only plan.

REP: Airtel Expands Network Footprint in Bankura District of West…

Load More
Subscribe
Notify of
7 Comments
newest
oldest most voted
Inline Feedbacks
View all comments