The tariff war is not going to end soon, we says this as Mukesh Ambani - owned Reliance Jio is likely to continue free offers for next 12- 18 months which means that incumbents players will launch more plans to counter Jio.
Jio's tactic would lead to pressure on the average revenue per user (ARPU) of incumbent operators, US bank Morgan Stanley said in a report. It added that ARPU for Bharti Airtel, Idea Cellular, and Vodafone India has been effectively capped at about Rs 300 due to Jio's current offers, a report published in The Economic Times said.
However when GizBot had interviewed Rajan S Mathews, Director General of Cellular Operators Association of India, he mentioned that "the new offers by the Jio will continue to eat the revenue stream and that is going to have a cascading impact on Government revenue, payments to banks, as well as, equipment manufacturers and service providers to the industry."
Meanwhile according to a report by India Ratings and Research (Ind-Ra), the Indian telecom industry has lost around 20 percent revenue due to free services by Mukesh Ambani-led Reliance Jio.
Ind-Ra says that the incumbent telcos are moving towards more bundling of voice and data plans in line with RJio's voice calling bundled with data. Blended average revenue per user (ARPUs) are slated to decline by 10 percent in FY18.
Consolidation in the industry will help a quicker return of pricing power. The proposed merger of Vodafone Mobile Services Limited and Idea Cellular Ltd (Idea) will be positive for the telecom industry by eliminating duplication of a spectrum and infrastructure capex," report added.
However it says, smaller telcos may not be able to sustain cash burn by operating independently and are looking for exit options.
Reliance Jio has touched the 108.9 million customer base as on March 31, 2017, of which over 72 million signed up for Jio Prime.