50% of Reliance Jio users may switch to other service providers once freebies end

50% of Reliance Jio users may switch to other service providers once freebies end

Analysts expect Jio’s current user-base to erode by 50-60% after its data services become paid from April 1; say its Arpu may be higher than bigger rivalsImage result for Jio users from April

Will the end of Reliance Jio Infocomm Ltd’s (RJIL) promotional offer of free data service next month also end the industry’s suffering?

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Analysts say it is unlikely that the telecom sector will get back on track of healthy growth anytime soon. Most say it will take at least one to two years for that.

Since Mukesh Ambani’s Reliance Jio launched its data and voice services on the fourth generation long-term evolution (4G-LTE) network, incumbents such as Bharti Airtel, Vodafone, Idea Cellular and others have been struggling to keep financials in order.

“With the commercial launch of Jio’s services, I foresee that in a year or so, things overall will have a more stable and financial outlook will be sound. Telecom industry will be going through a period of pain but at the end of it, there will be some good coming out of it,” he said.

G Krishna Kumar, Bengaluru-based telecom analyst, expects the upheaval in the sector to continue as competition to grab data market will intensify.

He said that Reliance Jio may find it tough to retain its current user-base after its data services become paid.

Krishna Kumar predicted that 50%-60% of the users will withdraw from Jio post commercial launch from April 1.

“In the Indian context, most users are prepaid users and the average revenue per user (Arpu) in this segment is around Rs 100-130. If you compare that with Rs 300 that Reliance is offering, how many people will be able to afford that? Today, people are on Jio network because it is free. I believe 50%-60% of the users will pull off,” he said

Today 96% of mobile users in India were prepaid subscribers.

“Jio is trying to attract prepaid subscribers through the Rs 303 per month plan but may not be able to convert the prepaid subscribers There may also not be many takers for mobile porting as the quality of voice call on Jio network is very poor,” he said.

According to him, Jio may be able to attract customers in the post-paid segment, which is only 4% of the users and where the Arpu is about Rs 490 per subscriber.

“Jio could attract customers in this (postpaid) segment. Considering that the Jio’s voice quality is not good, the subscribers may go with incumbent connection for voice and Jio for data,” he said.

Another analyst, who did not want to be named, said since Jio’s mobile data usage was comparatively higher than rivals, it will earn better Arpu even if its rates are lower by few percentage.

“While the incumbent’s data usage is less than 1 GB per subscribers and Jio’s running in excess of 3-4 GB per subscriber, it went to 6 GB last month. So I would expect that Jio users being used to 6 GB data usage, even when they (Jio) start paying a price for that which is lower than the price of others, the 6 GB wouldn’t go down much. It will definitely be 50% or 40% of that because once you get used to it becomes an additive. And so, even at 20% lower price, he (Ambani) can still get better arpu than others. That seems to be the commercial strategy behind it,” said the telecom expert.

Source by┬ádnaindia…..

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