The average revenue per user (ARPU) for telecom players is unlikely to increase in 2018 as incumbents are focused on grabbing market share in terms of subscribers rather than an uptake in Arpu, according to analysts.
"We continue to see three reasons why major ARPU increase in 2018 is unlikely. First, the implosion of smaller operators leaves opportunities for incumbents to grab share, pushing Arpu increase as a lower priority, continuation of multi-SIM phenomenon prevents telcos from major price increase which could result in permanent loss of SIM and a rapid acceleration in 4G subscribers growth," UBS said in an analyst note dated January 8.
Indian mobile Arpus are among the lowest in the world and over the medium-term, as the market consolidates around three players, a gradual increase in ARPU is estimated, the report said.
According to experts, most of the mobile subscribers have held onto their first numbers, while Reliance Jio is the second SIM.
A report by Kotak Institutional Equities mentioned how recharge stickiness is important for Jio as it is yet to become the primary number for most subscribers. "This exposes Jio to the risk of losing the next recharge especially given that incumbents have closed the pricing gap versus Jio quite aggressively in the past few months and continue to enhance their LTE network coverage and capacity," it said.
The December 2017 quarter performance of Jio and the incumbents indicates that Jio's recharge momentum has been fairly strong, which is why the rationale behind Jio's latest pricing move is not understood. However, the scope for incremental revenue gains from a price cut looks limited given that Jio already has the lion's share of the market's LTE subscribers, Kotak report said.
Another note from Bank of America Merill Lynch said given the price-sensitive nature of Indian telcos market, any telco which gradually raises tariffs would face issues of slowing demand/move to competitors.
"Reliance Jio perhaps is looking to balance its net adds growth with ARPU hike so that it leads to overall revenue growth for the company," it said, commenting on the new tariff plan announced by RJio.
Last week, Jio had cut tariffs by Rs 50 for all its monthly schemes under which customers are getting 1GB data per day and also enhanced data limit to 1.5 GB from the existing 1GB for select plans. With this, all its plans -- Rs 199, Rs 399, Rs 459 and Rs 499 - will cost Rs 50 less. All Jio plans will continue to offer free unlimited calling and SMSes within India even during roaming. – DNA India