Industry

Jio to raise rates by 20-21% from December 1


Reliance Jio Infocomm (Jio) will increase its tariffs by 20-21% from December 1, following similar moves by rivals, in a bid to bring in more revenue from each customer. However, Jio’s prices remain slightly lower than rivals Bharti and Vodafone Idea(Vi) in some plans, as the market leader aims to touch 500 milion users.

“In line with its commitment to further strengthen a sustainable telecom industry, where every Indian is empowered with a true digital life, Jio today announced its new unlimited plans,” said the Mukesh Ambani-led telco in a statement on Sunday.

“These plans will provide the best value in the industry. Upholding the Jio promise of providing the best-quality service at the lowest price globally, Jio customers will continue to be the biggest beneficiaries,” it added.

From December 1, the telco’s price of its JioPhone subscribers will have an entry-level plan of Rs 91 ,about 21% higher from the earlier one. For the non feature phone subscribers, the plans of Rs 129 at the base will now be for Rs 155. There has been a hike in other 11 tariff plans and telco has included four add on data packs as well.

Airtel and Vi’s tariffed voice plan start at Rs 99.

Jio had to maintain a fine balancing act between generating higher average revenue per user (ARPU) and increasing its customer base, say analysts.

This, especially after the telco lost 11 million subscribers in the July-September quarter, to end the period with 429.5 million users.

The price hike in the telecom sector will improve average revenue per user (ARPU) – an integral parameter, for the entire sector by 15-17% over the next two -three quarter, say analysts. As of September end results, Jio’s ARPU was Rs 143.6, while Airtel and Vi clocked in ARPU of Rs 153 and Rs 109 respectively.

“…the current hike should increase the sector ARPU by 15-20% to Rs 155-160 next fiscal from around Rs 135 last fiscal year,” Crisil Ratings said after Airtel hiked tariffs.

It added that given the high operating leverage of the sector, the current tariff hikes will lift the sector’s Ebitda by around 40% to more than Rs 1 lakh crore in fiscal 2023 as compared to fiscal 2021.

In the second quarter of this fiscal, Jio Platforms (JPL) consolidated net profit stood at Rs 3,728 crore compared with Rs 3,651 crore at June end, and Rs 3019 crore a year ago. JPL is the holding company for Reliance Industries’ digital and telecom businesses.

For Jio, the tariff hikes come about two months after it launched its smartphone with Google called JioPhone Next. The phone is expected to get feature phone users upgrade to smartphones and the tariff hikes will further add to the ARPUs.

The telecom sector, which last saw prepaid prices go up in 2019, has stressed on the need for the revision to expand network coverage, prepare for 5G auctions and improve infrastructure. They come after the telecom relief package which included moratorium for spectrum and adjusted gross revenue (AGR) dues, reduction in bank guarantees amongst other measures.



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