Mumbai: Reliance Jio Infocomm Ltd’s new tariff plans are an effort to improve profitability and thus a positive for the telecom sector that has been hit badly due to aggressive play by the new entrant, says a report by ratings agency Icra Ltd.
“After amassing over 120 million subscribers, Reliance Jio is now focusing on pushing up the Arpu (average revenue per user) to improve its profitability," rating agency Icra said Wednesday.
Icra said new Reliance Jio plans announced Tuesday was a positive for the telecom sector as it points to a lifting up in tariffs and upping Arpu. The new plans are “attractively priced" for the subscriber and will “keep competitive intensity for the industry elevated," it added.
For the first six months since its September 2016 launch, Reliance Jio services were free, which impacted the sector very adversely with telecom firms reporting losses or dip in profits. After the free voice and data offerings ended on 31 March, it came out with its maiden paid-for plans with the one offering 1GB of free data per day for 84 days by paying Rs309, which translated into an Arpu of Rs96, being the most popular, Icra said.
“These plans were offered to consolidate the healthy subscriber base, which the company had amassed during its free offer period," the Icra report stated.
The most prominent of the revised Reliance Jio plans is Rs399, which offers 1 GB per day of 4G data and unlimited calling for 84 days, which will increase the Arpu to Rs124.
“Thus the new plan points towards an uptick in Arpu, although it still remain lower than prevailing industry Arpu wherein Bharti Airtel reported Arpu of Rs158 for Q4FY17, Vodafone at Rs142 and Idea at Rs142," the Icra report said.
The report added that this indicates easing on the Arpu pressure for telecom firms, even though the competitive pressure for the industry will continue to remain high. The agency said the Mukesh Ambani-led company is now moving towards a “balanced approach" between subscriber addition and revenue growth as the active subscriber addition has slowed down to 0.37 million in April.