Reliance Jio’s Rs199 postpaid plan likely to trigger tariff war: Experts1 min read . Updated: 12 May 2018, 02:41 PM IST
Reliance Jio has announced a new postpaid plan at Rs199 with an ISD calling service at a starting price of 50 paise per minute
New Delhi: The Rs199 new postpaid plan announced by Reliance Jio Infocomm Ltd is expected to hit revenue of competitors marginally and may trigger tariff war in the telecom industry, according to market analysts.
“Move could lead to another brutal tariff cut in the postpaid regime, hurting incumbents further: Jio’s postpaid tariffs are sharply lower compared to the current tariff plans offered by incumbents," JP Morgan said in its report.
“International tariffs offered by Jio are quite competitive and we could see downward pressure on such tariffs for incumbents. However, even in a scenario where we assume 10-15% of postpaid revenues are from international calls, and international tariffs get cut by 50%, the impact on overall revenue of incumbents is likely to be less than 2%," Goldman Sachs said.
The subscription of the Reliance Jio postpaid plan will start from 15 May. At present, the lowest monthly rent of Jio postpaid plan is Rs309. Customers opting for the Rs199 postpaid plan will not require to pay any security deposit and they will get unlimited free voice, SMS and 25 GB data at 4G speed. The company also announced international roaming service with outgoing calls at Rs2 per minute onwards.
CLSA analysts Deepti Chaturvedi and Akshat Agarwal in their report said 5% of industry subscribers are on postpaid service. Postpaid subscribers, although limited to 5-6% for Bharti Airtel and Idea-Vodafone, account for around 20% of their mobile revenue, the CLSA report said.
“Jio’s ₹ 199 per month postpaid plan is a sector negative and will delay the ARPU recovery for the sector," CLSA said. According to Morgan Stanley, the new plans of Reliance Jio targeting postpaid customers may impact 1% of Airtel’s mobile revenue in case the telecom major tries to match the tariff.
“...running a sensitivity analysis on whether Airtel were to match the Rs199 tariff, for every 10% of the postpaid subscriber base that downgrades its tariff plan, the impact on Airtel’s Indian wireless revenue would be 1%," Morgan Stanley report said.