On Sunday Jio said it will launch new unlimited plans by 6 December, which will raise its voice and data tariff by up to 40 percent
Mumbai: On Sunday some huge telecom operator such as Vodafone Idea Ltd and Bharti Airtel Ltd have been much higher than the Street’s prediction by the tariff hike announcement. It will help Airtel’s India mobile business swing back into profits at the pre-tax level, after several quarters of losses. In Vodafone Idea’s case, losses will reduce to a great extent. But given the fast pace of its market share losses, it would need to do more to retain the gains from tariff hike.
The huge gainer is Reliance Industries Ltd. Analysts at JM Financial Institutional Equities estimate incremental quarterly revenues of ₹2400 crore and ₹2100 crore respectively for Airtel and Vodafone Idea as a result of tariff hikes. In the case of Jio, which has said it will raise tariffs by 40% without giving details, JM’s analysts expect incremental quarterly revenues of as much as Rs 3900 crore. Incremental revenues are compared to reported revenues in the September quarter, assuming no change in the respective subscriber base of the three companies.
On Monday the market capitalization of Reliance Industries rose by about Rs 22650 crore, while Airtel and Vodafone Idea gained Rs 9370 crore and Rs 2730 crore.
The reason Jio gains more is that Airtel and Vodafone Idea not focussed on postpaid tariffs, presumably because tariffs in this segment are already far higher than pre-paid tariffs. And the postpaid segment accounts for about 30% of revenues for these companies. Jio hardly has any postpaid subscribers on its network, which means a much higher proportion of its revenue base is impacted by the tariff hike.
Jio has stated that it will provide its customers 300% higher benefits compared to its competition. This can potentially result in an increase in the pace of its market share gains. Jio’s revenue market share has risen from 7.4% two years ago to 34.2% in the first six months of this fiscal, according to data collated by JM Financial. While Airtel has kept its share intact at about 30.6%, Vodafone Idea’s market share has fallen from 39.3% to 29.5%.
On Sunday Jio said it will launch new unlimited plans by 6 December, which will raise its voice and data tariff by up to 40 percent. However, the Mukesh Ambani-led company said that customers will get up to 300 percent more benefits under the new plans and it will offer fair usage policy for outgoing calls from its subscribers on the network of other telecom operators.
“Jio will be introducing new all-in-one plans with unlimited voice and data. These plans will have a fair usage policy for calls to other mobile networks. The new plans will be effective from 6th December 2019,” the company said. Jio said it will continue to work with the government on the consultation process for the revision of telecom tariffs and looks forward to participation from all other stakeholders.
As an independent media platform, we do not take advertisements from governments and corporate houses. It is you, our readers, who have supported us on our journey to do honest and unbiased journalism. Please contribute, so that we can continue to do the same in future.
