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Reliance Jio's new plans are a win-win for subscribers and company

Reliance Jio Infocomm reported strong revenues for the March quarter with substantial customer additions aided by the launch of its cheaper JioPhone in February end. (Photo: Mint)Premium
Reliance Jio Infocomm reported strong revenues for the March quarter with substantial customer additions aided by the launch of its cheaper JioPhone in February end. (Photo: Mint)

  • Apart from tariff hikes, another key trigger for the company is likely to come from its partnership with Google. Reliance Jio and Google are working closely to launch a new 5G affordable smartphone, expected to be launched by later this year

Telecom major Reliance Jio has introduced five new prepaid plans with 'no daily limit' and validity ranging from 15 days to a year. These plans offer uncapped data and unlimited free voice calls for the duration of the validity periods.

Analysts say the new plans target subscribers who tend to hit their daily data limits more often on weekends, given higher data usage. In simple terms, these plans offer more options to customers who have different data usage patterns.

"The introduction of these plans is a step in the right direction, in our view. The adoption of these plans could drive a 55-108% jump in revenue/GB versus its 1.5GB/day plans driving margins," analysts at Jefferies India Pvt Ltd said in a report. The report added that while this premium may be adjusted in the future, the pricing premium on no daily data limit plans versus plans with daily data limits offers a way to raise ARPUs and margins. ARPU is short for average revenue per user.

It should be noted that competitors Bharti Airtel Ltd and Vodafone Idea Ltd are yet to launch similar plans.

Reliance Jio Infocomm Ltd reported strong revenues for the March quarter with substantial customer additions aided by the launch of its cheaper JioPhone in February-end. But given the higher payout for 4G and 5G, and spectrum payout, a concern among investors was that the company must hike tariff for wireless services to sustain its growth momentum.

According to analysts at Jefferies, the launch of new plans indicates that Jio is looking to boost ARPUs in the smartphone segment through up-trading rather than tariff hikes. Also, relaxation of daily data limits under new plans implies that Jio has surplus network capacity to handle traffic surges over the weekends, said the report.

Analysts say large spectrum purchase in recent auctions gives the company the flexibility to cater to increased data demand on weekends and during special events such as the IPL, which is another reason behind the timing of the move with regards to the new plans.

Apart from tariff hikes, another key trigger for the company is likely to come from its partnership with Google. Reliance Jio and Google are working closely to launch a new 5G affordable smartphone, which is expected to be launched by later this year.

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