Attractive offering from April 1 will cause more stress for Airtel, Vodafone, Idea
The paid offering from Reliance Jio announced by Reliance Industries Chairman Mukesh Ambani on Tuesday, will exert more pressure on rivals Bharti Airtel, Vodafone and Idea Cellular.
The new offerings will no longer be free but Jio has priced its services attractively to retain its 100 million customers, who have signed up since September 5, when the services were first offered. Jio is seeking to retain them through special prime memberships at a one-time fee of Rs 99 and Rs 303 a month for unlimited voice, data and content.
“Customers who sign up by March 31 (2017) will be able to use unlimited data and voice services for a year at Rs 303 a month under a special offer,” Ambani said, adding Jio would match the highest-selling tariff of other operators and provide 20 per cent more data.
Although the details were not known, the latest offer by Jio was at least 20 per cent cheaper than the unlimited plans announced by incumbents, analysts said.
“Falling voice and data realisations for incumbent operators are expected to continue in the March quarter and stabilise thereon,” said Manoj Behera of Phillip Capital.
Behera added, “Any improvement is expected to come only by the second half of 2017-18 and will depend on how the incumbents respond to the offers.”
Jio’s free offer last September forced Airtel to announce unlimited plans at Rs 549, down from Rs 749 a few quarters ago.
Revenues of Airtel and Idea have been hit by falling realisation and analysts said margins would be affected by higher costs. Idea’s operating profit margin, now 25 per cent, could decline by 100-150 basis points, they added.
Subscriber churn is also expected to rise after Jio’s paid plans start on April 1. The monthly churn levels for Idea and Airtel are four-six per cent. Since Jio’s launch, most users have two SIM cards. Airtel and Idea have seen a fall in data use as subscribers switched to the free Jio service.
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