Reliance Jio 4G Poses as a Big Threat to Data Tariffs

BENGALURU: Reliance Jio, a company owned by Mukesh Ambani proposed that they are going to launch 4G services. According to a report prepared by India Ratings and Research (Ind-Ra), its services can prove to be a major threat for the data tariffs and it will lead to disrupt the data pricing up to 30-40% in the Fiscal year 2017. The Economic Times website winds up the possible consequences which will lead to this disruption.

India Ratings and Research (Ind-Ra) reports to The Economic Times that
"A steep decline in data realisations coupled with gradual growth in consumption volumes could lower the data ARPUs. Data ARPUs have been growing, led by growth in per capita volumes consumed, which is offsetting the declining data realisations."

The scheduled 4G launch will strengthen the competition between the competitors and it will lead to decrease the market share, credit metrics and EBITDA margins of other telecommunication companies like Airtel, Vodafone and Idea. The website also adds that Reliance Jio will work to unsettle the share of large operators in their eminent geographies. This disturbance will lead to re-distribution of the market share that is currently held by top three service providers.

Airtel occupies the highest market share in the telecom market of India with 30% of revenue market share and 24% of subscriber market share. The market share of Idea is also constantly growing to match the second place company Vodafone. Vodafone, Airtel and Idea together share about 60% of subscribers using the telephone facility and holds the revenue market share of 67%.

The report suggests that during the Fiscal Year 2017, voice revenue will remain moderate, Minutes of Usage (MoU) will remain constant and the competitions will be on call realisations. Therefore, it is expected that after the launch of Reliance Jio the data realizations will decrease to 30-40% while the data revenue will remain stable. However, the data average revenue per user will remain restrained when compared to data consumption growth.

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