Info-tech

With unlimited data plans, RJio may be testing waters for tariff hike: analysts

Rajesh Kurup Mumbai | Updated on June 15, 2021

The plans have a combination of higher prices and lower data allowances

Reliance Jio Infocomm (RJio), a wholly-owned subsidiary of Reliance Industries Ltd (RIL), launching new unlimited plans could probably be testing waters for a tariff increase.

With a combination of higher prices and lower data allowances, the new plans appear to be an attempt to increase tariffs. But with existing plans in place the immediate impact is likely be limited, brokerage firm UBS said in a report.

“Moreover, the current data usage of 13 GB per month is lower than both new and existing plans, limiting any meaningful immediate upgrades, in our view. We believe RJio could be testing market appetite for such changes and the possibility that daily data limit plans are eventually removed or altered cannot be ruled out,” it added.

On June 11, the company had launched new tariff plans starting at ₹127.

Daily data

The company had launched new ‘Jio Freedom’ plans that have no daily data allowance but instead a total data quota available through the validity of the plan. The validities range from 15 to 365 days, with ‘unlimited’ daily allowance.

Since RJio's entry in 2016, these are the first set of plans without daily data limits.

According to CLSA, RJio’s new plans are unlikely to boost average revenue per user (a key financial metric for a telecom firm).

Comparing RJio’s pre-paid plans to incumbents reveal it still offers lowest rates in 15 days and even in 28 days RJio is at 20 per cent discount to Bharti Airtel and Vodafone Idea. However, in popular longer duration bundled (voice + data) pre-paid plan of ₹399 for 56 days 1.5 GB per day, Bharti Airtel and Vodafone Idea tariffs are comparable to RJio, CLSA said.

Even in other popular 84 days 1.5 GB per day long duration plan, incumbents tariffs are at low 7 per cent premium to Jio, hence incumbents will unlikely be impacted by RJio's new offers.

Transition to 4G

According to IIFL Securities, RJio (in RIL’s annual report) indicated transition of 300 million 2G users to 4G in the next 12-18 months.

“In our view, the timeline looks aggressive and the progress will hinge on the handset pricing and pack pricing of the Jio-Google smartphone,” it said.

RIL mentions that more than 250 million people in India have RJio as the only provider of broadband services. With Bharti’s 95.5 per cent coverage and Jio’s 99 per cent coverage, the 250 million extra households that can be served by Jio look fairly high and suggest that the definition of coverage is quite opaque, it added.

Published on June 15, 2021

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