Operators To Lower Tariffs By 10-15 pc, Says Fitch
With the launch of 4G service Reliance Jio has made “bold move” towards digitizing millions in the rural parts of the country, setting a tough benchmark for its competitors. To make such plan successful Reliance Jio will prompt incumbent operators to lower their tariffs to retain customers, and industry blended tariff could fall by 10-15 per cent in the next year, Fitch Ratings said.
“The incumbents are likely to respond by lowering their own tariffs to retain customers. We expect the industry blended tariff to fall by 10-15 per cent in the next year,” Fitch said according to TOI report, adding that fr small telcos and incumbent operators Reliance Jio’s entry will be “credit negative”which will rush industry consolidation.
Telecom experts believe that Reliance has planed its Jio venture to make digital revolution a success country, especially for millions of rural Indians, data mining is the future. Experts also think that Reliance is targeting nearly 450 million feature phone users who will make a shift to smartphones in the near future
Reliance Jio, which has officially launched services from 5 September 2016, will offer data services free for four months, after which it will offer 10 tariff plans, starting at INR19 a day for occasional users, INR149 a month for low data users and INR4,999 a month for heavy data users.Reliance Jio is offering customers free voice data under ‘welcome offer’ valid up to December 31 after which users will be given free voice calls for life and data plans at about one-fifth the market prices.
“Rising competition will lead to downward pressure on data tariffs at a time when capital expenditure will have to increase to support rising data consumption as cheaper 4G handsets become available,” Fitch said.
Jio’s blended tariff rates are at least 20-25 per cent cheaper than those of the incumbent telcos, given the lower data charges, and free voice calls or text messages.
The recent rise in data average revenue per user (ARPU) will soon start to reverse and cannibalisation by data services will continue to reduce voice ARPU, it predicted.
“Jio’s tariff plans may gradually push the market toward ‘data-only plans’, under which customers are charged only for data , not for voice and text messages. Such a shift could be particularly disruptive, given that most incumbents still derive the bulk of their revenue and profit from voice and text messages,” it said.
Since other Indian private players like Airtel and Idea Cellular, have slashed prices and increased the benefits of up to 67 per cent, on the existing price plans,Tarun Pathak, Senior Analyst, Mobile Devices and Ecosystems, Counterpoint Research believes that with Reliance Jio’s disruptive pricing and lucrative offers, Jio is set to beat the rivals and become consumers first choice and to maintain Reliance Communication’s ‘Karlo Duniya Muthhi Mein’ tradition.
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