Jio's ultra-low postpaid plans further decline profitability of incumbents: Ind- Ra

RJio added 9.4 million new subscribers while Idea Cellular Limited came close second by adding 9.14 million new subscribers.

    Mukesh Ambani- owned Reliance Jio's introduction of ultra-low postpaid plans would lead to a further decline in profitability of incumbents as they are likely to revise their postpaid tariffs to retain their customer base, according to India Ratings and Research( Ind- Ra).

    Jio's ultra-low postpaid plans further decline profitability


    It pointed out that RJio held number three subscribers position in five out of eight top circles in March 2018 with number two position in Karnataka.

    However, Bharti maintained a leadership position in six out of the top eight circles, whereas Vodafone number one position was limited to Gujarat circle. Vodafone and Idea on a combined basis would be number one in four circles

    The research firm said that subscriber growth remained positive during February and March 2018 on account of new attractive plans launched by telcos, in addition to growth stream of RJio.

    RJio added 9.4 million new subscribers while Idea Cellular Limited came close second by adding 9.14 million new subscribers. RJio also gained 6.5 percent subscriber market share during the 12 months ended March 2018.

    While India's largest telecom operator Bharti Airtel Limited, Vodafone India Limited and Bharat Sanchar Nigam Limited added 8.4 million, 5.6 million and 2.5 million new subscribers respectively. Exiting telcos reported 8.6 million subscriber losses on a combined basis in March 2018.

    The top three telcos accounted for 58 percent of subscriber market share in March 2017, which increased to 62.1 percent in March 2018.

    Furthermore, RJio recorded the highest decline of 11 percent qoq in ARPU (per month) in Q4FY18. Telcos continued their focus to increase the percentage of data subscribers as part of total subscribers to earn higher ARPU.

    Besides this, the research firm opined that proposed National Digital Communications Policy would bring about limited respite for the debt-laden telecom sector, although it lays a thrust on digital infrastructure and reflects a shift in the telecommunication regulation landscape.

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    The draft policy proposes a rationalization in spectrum usage charges to reflect the cost of regulation and administration of spectrum, as well as license fee and Universal Service Obligation Fund levy, it further said.

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