Mukesh Ambani's RJio piles on pressure with new Rs 199 postpaid plan

After capturing prepaid telecom customers, Reliance Jio has set sights on the lucrative set of postpaid users with a Rs 199 per month plan. Postpaid subscribers spend more than five times of an average pre-paid customer. Numbers shared by Telecom Regulatory Authority of India (Trai) show postpaid consumers constitute about 5 per cent of the market with an average spend of Rs 378 per month in 2017 against Rs 67.27 for prepaid users. 

Jio’s Rs 199 plan offers 25 GB of data along with free calling and free subscription of Jio apps. The plan, at almost half the price of what others are offering, is going to hit the old operators further. Airtel’s plan that can be matched with Jio starts at Rs 399, which offers 20 GB of data, unlimited calling and free subscriptions to Airtel TV and Wynk music. Vodafone’s plan, too, starts at Rs 399, which gives 20 GB of data and unlimited calling along with Vodafone Play services. Idea Cellular offers similar benefits for Rs 389. In case, the oler telcos follow Jio, postpaid  average revenue per user will come down.

The Mukesh Ambani-owned company said the plan will be available for subscription starting May 15. “JioPostpaid marks a paradigm-shift in the way postpaid services are offered and consumed, just like Jio did with its prepaid services,” the company said.

With the entry of Jio in India’s telecom market in September 2016, tariffs have only gone down. The telco started with an offer of free services for a few months and ever after it started charging, the rates were much cheaper compared to plans offered by incumbent telcos. In order to remain competitive, the older telcos too reduced prices which cost them heavily in terms of profitability. The average revenue per user (ARPU) of Airtel has dropped over 70 per cent in the last 2 years to Rs 116 in the March quarter. The postpaid plan by Jio is going to further hit the ARPU of incumbents as some customers may move to Jio if they don’t reduce the postpaid tariffs. 

Though the big operators have maintained to retain their subscribers and market share in 2017, they have paid a heavy price in terms of profitability. The telecom industry’s AGR declined by 18.87 per cent to Rs 1.60 trillion in 2017 from Rs 1.98 trillion in 2016.