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Jefferies: Jio’s Sharp Discount Postpaid Offer May Hit ARPU of Other Players

The report further said postpaid churn is lower and it is believed that shift to Jio will be gradual

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Jio’s sharp discount postpaid offer may hit ARPU of other players.
Jio’s Sharp Discount Postpaid Offer May Hit ARPU of Other Players. IANS

A day after Reliance Jio announced its postpaid offer at Rs 199, global investment banking firm Jefferies on Friday said the sharp discount launched by Jio would make incumbents respond to it which may further cut average revenue per user (ARPU) for Bharti and Idea.

Jio on Thursday launched a new postpaid plan at Rs 199 offering 25GB of data and unlimited voice and SMS. It is also offering international roaming rates of Rs 2/min for voice, Rs 2/MB for data and Rs 2/SMS. It also offers Rs 500/day roaming pack with Unlimited voice/data/SMS. The subscription will start from May 15.

Jio
Jio (Wikimedia Commons)

“This is at 50 per cent discount to comparable packs by incumbents and 60 per cent discount to postpaid ARPUs. We have been concerned on Postpaid as it contributes 20 per cent plus of revenues. With the sharp discount launch by Jio we expect incumbents to also respond and thus expect further decline in ARPU for Bharti and Idea. This is likely Jio’s first offer aimed at enterprise market. Remain cautious on the sector,” the Jefferies report said.

“We have been concerned on the postpaid revenues for incumbents given the cost to consumers is 3x of prepaid. Postpaid while making up only 7 per cent of Top 3 operators subscribers, contribute 20 per cent plus of their revenues. While the ARPU for the segment had dropped 25 per cent it was lower than that witnessed in prepaid,” it added.

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” Incumbents will, in our view, have to respond to Jio’s plan and cut plan prices. Any 10 per cent cut in postpaid prices will lead to around 2 per cent cut in overall ARPU. Any 10 per cent cut in postpaid prices will lead to 12 per cent/6 per cent EBITDA (Earnings before interest, tax, depreciation and amortization) hits for Idea and Bharti respectively,” the report said.

The report further said postpaid churn is lower and it is believed that shift to Jio will be gradual. “Around 40 per cent of the postpaid customers are corporate, and these would be a key target, in our view.” (IANS)

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Reliance Jio Added Most Subscribers in Year 2018

Airtel was the other gainer during the month under review with an addition of around 1.02 lakh new customers, taking its total tally to 34.18 crore

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Jio
Airtel was the other gainer during the month under review with an addition of around 1.02 lakh new customers, taking its total tally to 34.18 crore. (Wikimedia Commons)

Reliance Jio led the subscription race in November 2018 adding around 88.01 lakh subscribers across the country, the highest among all the telecom service providers.

Data released by the Telecom Regulatory Authority of India (TRAI) on Friday evening showed that the subscriber base of Reliance Jio by November 30 was around 27.16 crore.

The total number of mobile phone subscribers in the country by the end of November was 117.18 crore, with a net addition of 17.39 lakh customers during the month, as per the data.

“Total wireless subscribers (GSM, CDMA and LTE) increased from 1,170.02 million at the end of October 2018 to 1,171.76 million at the end of November 2018, thereby registering a monthly growth rate of 0.15 per cent,” TRAI said in its statement.

Reliance Jio, Source: www.reliancejio.website

“As on November 30, 2018, the private access service providers held 89.99 per cent market share of the wireless subscribers whereas BSNL and MTNL, the two PSU access service providers, had a market share of only 10.01 per cent.”

The state-run Bharat Sanchar Nigam Ltd (BSNL) added around 3.78 lakh subscribers in November, taking its total tally to 11.38 crore, it said.

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Airtel was the other gainer during the month under review with an addition of around 1.02 lakh new customers, taking its total tally to 34.18 crore.

The largest service provider in terms of subscribers and revenue, Vodafone Idea, however, lost around 65.26 lakh subscribers and its subscription base as of November-end was around 42.11 crore. (IANS)