Reliance Jio offer more data, aims to counter
Reliance Jio Infocomm (Jio) has revised its tariff plans for the second time in two weeks, offering 500 Mb more data at the same price points, saying it was bettering bitter rival Bharti Airtel’s recent offers, underlining the continuing tariff war which will hurt average revenue per user further.
The Mukesh Ambani-led telco, with some 160 million users, Tuesday said customers who were getting 1GB a day for Rs 149, Rs 349, Rs 399 andRs 449 plans will now get 1.5 GB every day with validity of 28 days, 70 days, 84 days and 91 days, respectively.
Subscribers will get 2GB a day instead of 1.5GB per day if they opt for plans priced at Rs 198, Rs398, Rs 448 and Rs 498 with a validity of 28 days, 70 days, 84 days and 91 days, respectively.
“These plans have been launched as a response to Airtel’s tariff changes,” a company executive said. The new offers are effective January 26.
Under a recently revised plan, Airtel’s subscribers will get 1.4 GB data per day if they recharge for Rs 199, Rs 448 and Rs 509. Those who recharge for Rs 349 will get 2.5GB data per day, as compared to 2GB data earlier. Prices may vary according to circles, Airtel said.
“Jio is playing a capacity game because if incumbents have to catch up, then they need to provide more data, which is difficult because they are yet to convert to VoLTE services,” said a senior telecom analyst who did not want to be named.
Analysts say the Voice over LTE (VoLTE) technology is allowing the new entrant more flexibility, as it allows more efficient use of the same spectrum.
Bank of America-Merrill Lynch said in a report that given Jio’s lower costs, the new entrant would always want its pricing to be 15-20% lower than that of its rivals.
“Competitor response will determine future pricing,” BoFA-ML added.
While Jio’s entire network is built on VoLTE, Airtelhas just rolled out the technology for its users, and is expanding it across India. Vodafone has also just launched the service in Gujarat while Idea is testing it out.
The analyst, quoted above, added that that the new plans, available to the customers from January 26, could hit the average revenue per user (ARPU) – a key industry metric – of the players by 20-30%. That is because many of the subscribers would want to now move down to lower rate plans, which offer similar data benefits, thus hurting revenue.
Jio clocked in an ARPU of Rs 154 compared to Rs123 of Airtel for the quarter to December. Idea’s ARPU, which too has been falling, is expected at around Rs 115 when the company reports results Wednesday.
To get customers at the lowest price range possible with highest data offering, Jio now is offering 2GB for 28 days for Rs 98. Incumbents Bharti Airtel and Vodafone for Rs 98 and Rs 99 offer respectively its customers 1GB for the same period.
Jio, in its third quarter results, had said that it will continue to offer 20% more than competition to its customers. This will be Jio’s second tariff revision in the new year and price war is mainly on data packages.
Brokerage UBS said Jio’s management had suggested the company’s focus on market share gain and offering higher value to customer compared to incumbents. “We believe APRU increase for the industry is more likely a CY19 story as top three operators continue to vie for market share stability in CY18.”
The Mukesh Ambani-led company, which upended the market since its entry in September 2016 with its initially free voice and data offerings, posted a profit of Rs 504 crore and a 12% on-quarter increase in revenue to Rs 6,879 crore in the three months ended December.
The new offers are meant for telco’s Prime subscribers, who are the set of subscribers that have taken up the one-time annual membership fee of Rs 99.
Source by:- economictimes