Reliance Jio Infocomm Ltd said on Thursday that it was withdrawing its “summer surprise" offer of free services in April-June, heeding a directive from the telecom regulator.
Under the offer, all Jio Prime members making their first recharge payment of Rs303 (or higher) got three months’ complimentary services in addition to the benefits offered under their tariff plan.
“Today, the Telecom Regulatory Authority of India (Trai) has advised Jio to withdraw the three months’ complimentary benefits of Jio Summer Surprise," the company said in a statement. “Jio accepts this decision. Jio is in the process of fully complying with the regulator’s advice, and will be withdrawing the three months’ complimentary benefits of Jio Summer Surprise as soon as operationally feasible, over the next few days."
All customers who have subscribed to the offer prior to its discontinuation will remain eligible for the offer, added Jio, which recently extended the deadline for its Jio Prime membership and other plans till 15 April.
Telecom firms have protested against the freebies offered by Jio since its launch in September, when it made voice calls free for a lifetime; it also offered free data until the year-end, later extending it to 31 March.
Also Read: Will Reliance Jio’s latest free offer salvo force Competition Commission’s hand?
The Telecom Commission recently asked Trai to implement “in letter and spirit" its 2002 decision, which restricted the validity of promotional offers to 90 days, and a 2008 order, under which all telecom service providers were required to state the eligibility criteria for such offers and the duration for which they are valid.
The free services offered by Reliance Jio eroded the profitability of telecom operators during the quarter ended 31 December.
The Telecom Commission is also worried about declining licence fees, spectrum usage charges (SUC) and service tax collections from the industry.
Licence fee collection declined to Rs3,166 crore in the December quarter from Rs3,584 crore in the preceding three months. SUC declined to Rs1,553 crore from Rs1,820 crore during the period.
The commission observed that any fall in industry revenue will impact investment and loan repayment capacity, which may result in defaults on loans and spectrum purchase charges owed by operators to the government.
Since Jio’s launch, the telecom industry has lost about 20% of its revenue, India Ratings said, revising its sectoral outlook for 2017-18 to “negative".
“It will be interesting to see how many people will stick with Jio now. Now, exact pricing game will start. I don’t think it will be a big negative for Jio as tariffs that they have rolled out are more or less at par with the industry. I expect the dust to settle down and a clearer picture to emerge for the future of the industry," said Dharmesh Kant, head of retail research at Motilal Oswal Financial Services Ltd.
Jio has more than 100 million subscribers and around 72 million Prime subscribers, who are essentially paying customers.