The launch of services by Jio in September 2016 had disrupted the whole sector, with operators matching low rates to maintain competitive edge. However, in doing so, their revenues and profit have gone for a toss. Arpu of the market leader, Bharti Airtel, has dropped by about 70 per cent since Jio’s launch.
Airtel India’s chief executive Gopal Vittal, after announcing the results a few days ago, told investors the Arpu had been dropping but the target was to add more customers and emerge stronger from the phase.
He said when any second-generation mobile technology (2G) user migrated to 4G, the Arpu doubled and that was going to be the Airtel target. Currently, many 2G users on their network have an Arpu of Rs30-50.
Analysts said as the termination rate was reduced to 6 paise per minute from 14p by the Telecom
Regulatory Authority of India, incumbent operators’ revenues declined because they were the main beneficiary of calls terminating calls on their network, owing to their larger user base. Jio was a net giver for termination charges to incumbent operators and the drop in rates had benefited it.
Jio has reported a net profit of Rs 5.1 billion for the March quarter, as it kept the momentum with a net addition of 26.5 million subscribers. It had reported its first profit of Rs5.04 billion in the previous quarter since launch of its commercial operations in September 2016.
The customer base of Jio reached 186.6 million at the end of March, with the company also having the country’s largest data subscriber base and the gap widening further with other operators. The telco said engagement metrics of its subscribers were the highest in the sector, with average data consumption at 9.7 GB per user per month and average voice consumption at 716 minutes per user per month.