Reliance Jio's present subscriber base is 331.3 million subscribers, according to Jio’s April-June financial quarter
Jio’s average revenue per user (ARPU) has declined consistently over the past six quarters
Reliance Jio, India’s youngest and only profitable telecom operator, on Friday overtook rival Bharti Airtel to become the country’s second largest operator in terms of mobile phone subscribers.
According to data from the Telecom Regulatory Authority of India, Jio, which entered the sector in September 2016, had 322.98 million users and 27.8% subscriber market share, against Airtel’s 320.38 million users and 27.6% market share as of end-May.
The company’s present subscriber base is 331.3 million subscribers, according to Jio’s April-June financial results also announced on Friday when it reported a profit of ₹8.91 billion, up 45.6% year on year and an operating revenue of ₹116.79 billion rupees, up 44% on year.
A declining ARPU means subscriber additions on the network outpace its growth in revenue. In other words, every incremental user contributes less to the total revenue.
This essentially implies that the quality of Jio’s subscriber base is becoming weaker in terms of paying capacity of the user. Moreover, a declining ARPU for Jio is good for its rivals as it would put some sort of pressure on Jio to raise tariffs, as the industry clamours for higher prices.
“The company’s performance is steady, but new subscribers are not adding to revenue much. Tariff hikes have to happen but when will Jio go for it is the question," a Mumbai based analyst said requesting anonymity.
Interestingly, as Jio continues to widen its subscriber base by adding low-paying users on its network, rivals Airtel and Vodafone Idea have started weeding out inactive customers through minimum monthly recharge plans of ₹35, launched in November. The telecom companies expect the focus on paying users will improve ARPU.
Airtel’s ARPU for the March quarter was ₹123. The company has not yet announced financial results for the June quarter but analysts expect Airtel’s ARPU to rise further as it gets rid of low-paying users on its network. To be sure, Airtel only counts paying users for ARPU calculation.
Vodafone Idea’s ARPU was at ₹104 in the March quarter, up from ₹89 in the December quarter, and ₹88 in the three months ended September 2018.
Jio, which dreams of being the number one telcom company, also must realise subscribers come at a cost. More subscribers would amean congestion on the network. It is a trade-off that Jio must ponder upon while its rivals pray for tariff hikes.
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