Reliance Jio disrupted the domestic telecom market with uber-cheap tariffs, and endless freebies. It has not only compelled rival telcos to slash prices in a bid to retain customers, but has also pushed the telecom industry into further losses and debt. However, the Jio honeymoon period for customers might just be ending. Jio has gradually started upping its prices and reducing validity periods. And that trend is likely to continue in 2018, states Goldman Sachs in a recent report. Also Read - Reliance JioFiber plans with free Voot Select subscription: Check plans, price, and other benefitsAlso Read - Airtel introduces new postpaid plans with more data, refreshes Family postpaid plans too
“We expect Jio to raise tariffs every few months, with the next potential increase in January 2018,” the US brokerage states. Jio raised its prices by 15-20 percent last week itself. It not only gives other telcos more breathing space, but also improves overall telecom ARPUs. Goldman Sachs also expects Jio to reduce the validity period of its Rs 309 plan from 49 days to 28 days in 2018. Jio has already reduced the validity of its popular Rs 399 plan from 84 days to 70 days in the recent revision. For a plan that is valid for 84 days, customers now have to shell out a minimum of Rs 459. ALSO READ: Reliance Jio reveals new tariff plans for prepaid and postpaid users: Here s everything you need to know Also Read - JioFiber broadband plans with free Netflix subscription: Check plans, price, data benefits, more
The biggest beneficiary of Jio’s revised offerings would be market leader Bharti Airtel, according to Goldman Sachs. “Airtel remains in an enviable position to grab market share and grow profits should the market continue consolidating at the tail end,” it said. Airtel is expected to improve its margins by 18 percent in 2018 as ARPUs rise. The operator has over 282 million subscribers and occupies nearly 30 percent of the mobile telephony market in India. In anticipation of a recovery period, Airtel stocks hit a 10-year high last week after Jio announced its revised tariffs. The ripple effect is likely to reach other incumbent telcos as well. ALSO READ: Reliance Jio s price hike is a step back, but in the right direction
For Jio though it could be a challenge to retain all of its 128 million customers once the subsidized rates end. The Mukesh Ambani-owned telco became the fastest in the world to notch up 100 million customers in February. Most of the growth was fueled by its free, unlimited data offerings. But April 2017 onward, Jio started charging its customers for data, and by and by, has raised tariffs. In August, it recorded a decline in active connections that now stand at 75 percent lower than the industry average of 86 percent. As rates go up further, it’d be interesting to see how Jio retains customers.