Mumbai: Free services offer from Reliance Jio will hurt the earnings of telecom operators for three months ended March 2017, pushing down mobile revenues by 6.5-7.5% on quarter-on-quarter basis, says a report.
Moreover, the Reliance Jio’s extended free services for Prime members till June, may also continue to keep the performance of telecom companies muted for the first quarter (April-June) of the current fiscal, according to ICICI Securities’ latest earnings preview of the sector.
“Fourth quarter (January-March) of 2016-17 performance of telecom operators would be impacted by the free services offer from Reliance Jio (RJio) on the higher subscriber-base as well as the reset of higher-value average revenue per user (ARPU) subscribers with higher allowances on lower packs by Bharti Airtel and Idea Cellular,” the report said.
ARPUs are expected to fall by 9.2% and 9.7% for Bharti and Idea respectively for the fourth quarter compared to the preceding period.
Further, mobile revenues are likely to drop by 6.5-7.5%, for period under review, the report said.
“Challengers (RCom, Aircel and Tata Tele) are likely to report much steeper revenue drop compared to the top-3 players,” the report said.
Billionaire Mukesh Ambani’s Reliance Jio on 31 March announced it had notched an unprecedented 72 million paid subscribers, and extended its deadline to 15 April for migrating other subscribers to its paid offer.
Reliance Jio had further sweetened the deal by announcing a ‘complimentary offer’ for three months to those who pay Rs303 prior to 15 April, thus offering data at rock-bottom prices. Paid tariff plan will kick-in only in July.
Reliance Jio launched the inaugural free voice and data plan in September last year, and in December extended the freebies till 31 March 2017, much to the ire of other operators who alleged that such freebies not only hit their profitability and disrupted the market but were also against the regulations.