Experts believe that the company will have to increase the prices of its tariffs to deal with the ever-decreasing subscribers and ARPU.
It is believed that Reliance Jio can increase its tariff prices in the coming days. The user (ARPU) on the average revenue of the country’s largest mobile service provider has been steadily decreasing. Apart from this, Reliance is continuously adding fewer users than its rival Airtel. Along with this, Jio has always remained a second phone for users due to cheap data plans.
In such a situation, experts believe that to deal with this, the company will have to increase the prices of its tariffs. The earnings coming on Friday will show how soon the tariff will increase. According to the Telecom Regulatory Authority of India (TRAI), Jio added 4.6 million subscribers in the December quarter, while its rival Airtel added 12.2 million.
Reliance Jio owner Mukesh Ambani thought that JioPhones will solve their problem. Although these new subscribers came because of the company’s affordable phones and plans, but they were entry-level users. According to Business Insider’s report, Jio is still a second phone for people due to cheap data plans. Jio’s bass is the least active subscriber percentage among the three private telecom companies. Jio has a total of 79 percent while Airtel has 97 percent active subscribers. This means that the user revenue (ARPU) on Jio is continuously decreasing.
According to an ICICI Securities estimate, low ARPU and interactive users can limit Jio’s revenue growth to only 30.5%. Telco has recorded a revenue growth of 39.9% in the last year.
Jio’s expenses are increasing continuously
According to ICICI Securities report, Jio also has to pay for using the towers. This is constantly increasing the cost. Apart from this, the company has also spent a huge amount on spectrum. In the recent auction, the company has bought spectrum worth Rs 57,000. The ICICI report states that if the company continues to do so, then its earnings may decline.
Despite providing full 4G service, Jio is still an underperformer in the case of ARPU. There are two reasons for this, including inactive subscribers and a large number of JioPhone users with low ARPU.
In its report dated April 8, 2021, ICICI Securities stated that, “We believe that if the current market structure is maintained, Reliance Jio should be comfortable in increasing the tariff, in which it is better off than customers.” Provides more value for. This structure will ensure that Jio expands its customers exponentially. ”
Subscriber growth and ARPU’s problem in front of Jio
If you talk about now, Jio has been facing trouble for the active subscriber market continuously for the last few quarters. Explain that active subscribers are those who are paying for telecom service. While Jio improved itself in the second half of 2020, it again fell behind Airtel in January 2021. While Airtel achieved 34.3% market share, Jio finished second with 33.2%.
While Jio achieved growth in the first half of 2020, Jio got a tough fight in the second half and Airtel added 15 million more subscribers than Jio.
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