Reliance Jio Infocomm’s (RJio) revised tariff plans point towards an uptick in average revenue per user (ARPU) for the company, with the operator now looking at improving profitability. This follows the company amassing more than 100 million subscribers.
On Tuesday, RJio updated its tariff plans under the ‘Jio Dhan Dhana Dhan’ offer, but with reduced benefits. The operator has reduced the validity of Rs 309 and Rs 509 plans to 56 days from the earlier 84 days, which results in 30-50 per cent higher monthly charges compared with the earlier promotional offer.
RJio, the telecom arm of Reliance Industries (RIL), had launched its Jio Dhan Dhana Dhan offer on April 11, 2017.
“Although the plans continue to remain attractive for the subscribers, they directionally point to ARPU improvements. 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 focussing on pushing up the ARPU to improve its profitability,” said Harsh Jagnani, Sector Head and Vice-President, Corporate Ratings at ICRA.
Compared with the earlier prominent plan, RJio’s ARPU improves from Rs 96 to Rs 124 under Rs 399 plan. This translates into an ARPU of Rs 124. Thus the new plan points towards an uptick in ARPU, although it still remains lower than prevailing industry ARPU, ICRA said in a note.
Bharti Airtel, the country’s largest telecom operator, has posted an ARPU of Rs 158 in the fourth quarter of FY17, while that of Vodafone India stood at Rs 142 and Idea Cellular at Rs 142.
“RJio reducing the pricing aggression and validity of its 4G promo offers may bring some relief to incumbents, although it may prove short lived, as the potential launch of 4G feature phones could prove disruptive for the large 2G GSM subscriber base, which accounts for 65 per cent of revenues for the top incumbents,” Morgan Stanley said in a report.
The industry is expecting RIL to launch 4G feature phones, with an announcement expected at its AGM on July 21.
A relief for incumbents
With RJio announcing revised tariffs plans, incumbents will get a breathing space, as the operator’s effective ARPU is now largely in line with the industry ARPU.
The battlefield is more even now with RJio’s low-priced offers versus the incumbents’ better customer experience and ability to fight price wars, PhillipCapital (India) said in a note. – The Hindu Business Line