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Photo: Mint
Photo: Mint

Jio raises monthly tariff plans to pass on interconnect charges to users

  • Move comes less than a fortnight after Jio announced that it would start charging 6 paise a minute for voice calls
  • Removal or reduction of the IUC would benefit Jio which has more outgoing traffic than incoming calls

NEW DELHI : Reliance Jio Infocomm Ltd has raised basic monthly tariff plans to account for interconnect usage charges (IUC) that the telecom operator has to incur for calls made to rival networks.

The company earlier offered a 28-day validity plan with unlimited voice calls and 2GB data per day for 198. A 222 plan introduced on Monday would have the same data benefits, unlimited Jio-to-Jio calls and 1000 minutes of calling for Jio to non-Jio numbers. This translates to a tariff hike of 24.

Reliance Jio also announced a new 333 plan offering 2GB data a day for 56 days, along with unlimited calls within the Jio network and 1000 minutes of Jio to non-Jio calls. This would mean a daily expense of 5.94 for the user. The closest existing plan with similar data benefits was for 398 with 70-day validity, which meant a daily expense of 5.68 for the user.

The company has also withdrawn packs of 19 and 52 — valid for one and seven days, respectively.

The move comes less than a fortnight after Jio announced that it would start charging 6 paise a minute for voice calls, as it “had been compelled, most reluctantly and unavoidably" by the Telecom Regulatory Authority of India’s (Trai) move to review the date for scrapping IUC from 1 January 2020.

IUC, at 6 paise a minute, is levied by mobile networks handling incoming calls from rival networks. A removal or reduction of the IUC would benefit an operator such as Jio which has more outgoing traffic than incoming calls. Bharti Airtel and Vodafone Idea Ltd earn a portion of their revenue from IUC as their incoming traffic is higher than outgoing.

Airtel and Vodafone Idea, which are currently battling shrinking revenue streams thanks to Jio’s cut-throat tariffs, have welcomed Trai’s regulatory rethink.

“It looks like 6 paise per minute charging doesn’t seem to have gone well with customers," said Himanshu Shah, an analyst at Dolat Capital.

Analysts said the price rise bodes well for incumbents Bharti Airtel and Vodafone Idea which have been complaining that current tariffs are unsustainable and price repair must happen in the sector.

“Jio said that it will only charge 6 paise per minute till Trai scraps IUC. That consultation is still happening and the regulator is yet to take a decision. Hence it is strange that at this time Jio has come out with new plans which are inclusive of IUC minutes. This will lead to a rise in ARPU for Jio," a Mumbai-based analyst said requesting anonymity.

Responding to Mint’s query, a Jio spokesperson said that there was no price increase. “The user currently pays 198 + IUC top-up for off-net mobile calls. The same is being made available in a bundled form," the spokesperson said.

However, a user of the 198 plan which earlier had unlimited calls across networks will now also have to buy a top-up voucher to make calls to rival networks.

“The users continue to get the earlier packs as well, so it (new plan) is for those users who want peace of mind," the spokesperson said.

This price increase also comes at a time when Jio’s average revenue per user (ARPU) has fallen for seven straight quarters. ARPU is the total revenue of the operator divided by the number of users or connections on its network.

Jio’s ARPU fell to 120 with 355.2 million users of September end from 122 with 331.3 million users as of June end.

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.

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