Since Reliance Jio's launch in September, mobile phone bills have fallen Rs11,600 crore on a quarterly basis, or Rs46,600 crore on annualized basis
Since Reliance Jio Infocomm Ltd launched its services in September 2016, telecom tariffs have declined across the board. How much have Indians collectively saved on mobile phone bills since then?
A report by Kotak Institutional Equities points out consumer-level wireless spending (including service tax) fell to Rs33,000 crore in the March 2017 quarter. That’s down from Rs43,700 crore a year ago and a peak of Rs44,600 crore in the June 2016 quarter, the last ex-Jio quarter.
As such, the reduction in wireless bills works out to Rs11,600 crore on a quarterly basis, or Rs46,400 crore on an annualized basis. On average, based on this data, consumer spending has fallen by 26% since Reliance Jio’s launch.
These computations are based on the Telecom Regulatory Authority of India’s performance indicator report for the March 2017 quarter, with some adjustments made by Kotak’s analysts.
Of course, as the saying goes, one man’s food is another man’s poison. The industry is in the doldrums as a result, which also means that banks with exposure to troubled assets in the sector will be in trouble. Besides, lower revenues for the sector mean lower collections for the government. Telecom companies pay around 12% of adjusted gross revenue to the government in regulatory fees, apart from being the goose that lays the golden egg whenever spectrum auctions are conducted. But those expectations now have to be toned down considerably.
Kotak’s analysts also point out that consumer-level spending on wireless services fell to as low as 0.79% of annualized fourth quarter fiscal year 2017 nominal gross domestic product (GDP), compared to 1.2-1.3% pre-Jio.
Add wireline and fixed broadband spending and Kotak estimates that the total consumer spending on all three services was below 1% of GDP in the March quarter. “Excluding outliers on the higher side, the global range of total spends is 1.5-2.5% with the median well above 2%," pointed out Kotak.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!