MUMBAI: Reliance Jio Infocomm (Jio) unleashed another price disruption in an heavily debt-riddled industry, wherein all existing tariff plans with 1GB data have been revised to offer either 50% more data or a Rs 50 discount, amove which could hit the average revenue per user of rivals such as Bharti Airtel, Vodafone India and Idea Cellular.
The Mukesh Ambani-owned telco, with some 160 million users, has slashed the prices of four of its plans by Rs 50. So, for example, customers who were paying Rs 199 for 1GB a day will now pay Rs 149 for that amount of data for 28 days.
To target the data guzzling subscribers, the new entrant has plans at Rs 198, Rs 398, Rs 448 and Rs 498 with 1.5 GB a day for 28 days, 70 days, 84 days and 91 days respectively.
This means while a subscriber gets 1GB a day for Rs 198-199 under the price plan offered by the incumbents such as Bharti Airtel and Vodafone India, he or she will get 42GB data for a similar price under Jio.
For 1GB a day, a customer can also opt for plans priced at Rs 349, Rs 399 and Rs 449 with validity of 70 days, 84 days and 91 days respectively. Competitor Bharti Airtel offers 2GB a day for Rs 349 which is valid 28 days. Jio’s Rs 399 plan, which has been amongst its most popular offer, has been revised to offer 20% additional data with increased validity of 2 additional weeks.
Analysts say the new plans, available to the customers from January 9, could hit the average revenue per user (ARPU) – a key industry metric – of incumbents by 20-30%
“How can the incumbents match up? The ARPUs will take a severe beating since incumbents will now have to play catch up,” said a telecom analyst who did not want to be named. And if incumbents match what Jio is offering, their subscribers may want to opt for those lower priced plans, diluting ARPU.
ET had earlier written that the industry under a debt of Rs 5 lakh crore has seen a 40% drop in ARPU in the September end quarter compared to same period last year.
The telecom industry, engulfed in brutal tariff war, was hoping for stability this year, since the Mukesh Ambani owned telco had inched their tariff plans upwards a couple of times last year.
Analysts say that the Voice over LTE (VoLTE) technology used by the operators is allowing the new entrant more flexibility, say industry analysts. “Jio uses VoLTE which allows more data services at cheaper costs while incumbents are on mainly on 4G LTE services and for them these new plans are cash guzzlers,” said a second analyst who did not want to be named as well.
While Jio’s entire network is built on VoLTE while Airtel has just rolled out the technology for its users, and is expanding it across India. Vodafone and Idea have said they will roll it out shortly.
“The telco (Jio) is covering customers across all price bands, ensuring more will join them and those who have been their subscribers remain satisfied with the huge data benefits,” said the analyst quoted above. Till now for Rs 149 plan in Jio, a subscriber would get only 4GB data a month.
The new offers are meant for telco’s Prime subscribers, who are the set of subscribers that have taken up the one-time annual membership fee of Rs.99.