Business Standard

Jio's post-paid plans indicate shift towards higher ARPU regime: Ind-Ra

Reliance Jio recently-announced post-paid plans indicate the telco's continued steps towards improving the industry-level average revenue per user, according to India Ratings and Research

reliance jio, RIL

Representative image

ANI

Reliance Jio Infocomm Ltd's (RJio) recently-announced post-paid plans indicate the telco's continued steps towards improving the industry-level average revenue per user (ARPU), according to India Ratings and Research (Ind-Ra).

The tariff differentiations between telcos -- RJio, Bharti Airtel Ltd (BAL) and Vodafone Idea Ltd (VIL) -- have also been gradually thinning away over the past nine to 12 months, indicating lowering competition intensity.

Click here to connect with us on WhatsApp

RJio's plans do not threaten the post-paid customer base of BAL and VIL due to sticky nature of customers and similar content offerings.

Structurally, Ind-Ra said that green shoots are visible in the sector due to alleviation of regulatory risks and moderation in competitive intensity in FY21 compared to the past two to three years.

 

The tariff of RJio's post-paid plans are almost double of its existing plans. Post-paid plans are typically priced at 12 to 20 per cent premium over pre-paid plans for the same validity period. So any increase in the proportion of post-paid subscriber base in the overall base of telcos will be ARPU accretive.

Although the shift from post-paid plans to pre-paid plans may not lead to an immediate spike to the ARPU in the near term, since post-paid subscribers represent only around five per cent of total subscriber base, the move indicates that structurally ARPU has started improving as also evident over the past nine months.

Ind-Ra said the difference among the tariffs offered by three telcos is also reducing gradually for both pre-paid and post-paid plans. RJio had reduced the discounts offered in its pre-paid tariffs from the tariffs offered by BAL and VIL to 25 per cent in December 2019 from 33 per cent two years back.

The tariff differential between the pre-paid plans of RJio from the pre-paid plans offered by BAL and VIL is now 25 per cent for the 84 days and 28 days validity plans while the plans for 56 days validity have become exactly comparable.

The tariffs of RJio's post-paid plans are at about 20 per cent discount to similar plans of BAL and VIL. However, it may not lead to any customer churn for BAL or VIL as post-paid customers are generally sticky in nature.

Besides, BAL and VIL already have similar plans or they can tweak their existing plans to match RJio's content offering (for example free subscription of over-the-top platforms).

At the industry level, the mix of post-paid and pre-paid plans may not change, given the premium pricing required to be paid for these plans compared to price-sensitive voice-only customers, said Ind-Ra.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Sep 26 2020 | 11:51 AM IST

Explore News