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Jio's postpaid play poses no risk to Vodafone, Airtel; signals lowering of competition: Report

Reliance Jio's newly launched postpaid plans indicate a shift to higher earnings and lowering of intensive competition in the telecom space, India Ratings and Research said in a report on Friday. 

PTI PTI
New Delhi Published on: September 26, 2020 13:45 IST
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Image Source : JIO

Jio's postpaid play poses no risk to Vodafone, Airtel; signals lowering of competition.

Sector leader Reliance Jio's newly launched postpaid plans indicate a shift to higher earnings and lowering of intensive competition in the telecom space, India Ratings and Research said in a report on Friday. The postpaid plans indicate Jio's continued steps towards improving the industry-level ARPU (average revenue per user), India Ratings said.

The tariff differentiations between Jio, Bharti Airtel and Vodafone Idea have also been gradually thinning away over the past nine to 12 months, indicating lowering competition intensity, it said.

It can be noted that since its 2016 launch, the deep pocketed Jio's aggressive play has led to a radical change in the industry, which has delivered services at cheaper rates to the common people, but hurt the finances of telcos and led many operators to exit and also file for bankruptcies.

India Ratings said Jio's plans do not threaten the postpaid customer base of Bharti Airtel and Vodafone Idea due to sticky nature of customers and similar content offerings.

There are structural green shoots visible in the sector owing to the alleviation of regulatory risks and moderation in competitive intensity in FY21, compared to the past two to three years, it said.

The tariffs of Jio's postpaid plans are almost double of its existing plans, it said, adding that postpaid plans are typically priced at 12-20 per cent premium over prepaid plans. "Therefore, any increase in the proportion of postpaid subscriber base in the overall base of telcos will be ARPU (average revenue per user) accretive," it said.

The shift from postpaid plans to prepaid plans might not lead to an immediate spike in ARPU in the near term, as postpaid subscribers represent only around 5 per cent of the total subscriber base, but the move indicates that structurally ARPU has started improving, it said.

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