Tariff Hike Could Increase Reliance Jio Average Revenue Per User: Report

Reliance Jio has finally announced its revised tariff plans, which are 40 percent costlier like other operators. However, this also shows that the company is somehow moving away from the deep discounting. That is good for the industry and Jio, as the whole telecom industry is facing a huge financial crisis.

In fact, industry analyst expects that it would help Jio to increase its earnings before tax and EBITDA by 33 percent for FY21. "Jio has also introduced a new 56-day category - offering more voice calling benefits (IUC minutes) vs. the 28-day category - that comes at a higher cost per GB pricing for the consumer, which suggests that Jio no longer intends to incentivize deep discounting," SBICap Securities was quoted by ET.

Besides, the firm expects that Jio will continue to add 9 million subscribers every month until March 2020. In addition, the firm reveals that there are high chances that Jio will get more benefit after this tariff hike. Similarly, another firm CLSA expects that this will further increase in Jio's revenue. However, the firm is waiting for JioPhone tariffs.

It said, "About 20 percent of its customer base comes from JioPhone - and said users may prefer 28-day plans over the longer duration plans which may lead to higher ARPU, besides falling interconnect costs owing to the carrier charging 6 paise a minute for off-net calls."

Adding to that "This could potentially raise Jio's FY21 revenue and ARPU by 6 percent and EBITDA by 11 percent... We continue to assume another 10 percent tariff hike in April 2021." Similarly, Goldman Sachs says that this will increase Jio ARPU by 37 percent.

For the unaware, the company has introduced many plans, which will be effective from December 6. The new plans are valid for one, two, three months, and 365 days. Notably, the company is also providing free access to all its apps.