Reliance Jio’s free services to impact telecos Q4 FY'17 earnings: Report
Reliance Jio’s announcement of some attractive plans for consumers has forced other telecom firms to cut voice and data tariffs, pushing their mobile revenues by 6.5-7.5 per cent on quarter-on-quarter basis, says a report.
Moreover, the RJio's extended free services for prime members till June, may also continue to keep the performance of telecom companies muted for the first quarter (April-June) of the current fiscal, according to ICICI Securities' latest earnings preview of the sector.
"Fourth quarter (January-March) of 2016-17 performance of telecom operators would be impacted by the free services offer from Reliance Jio (RJio) on the higher subscriber-base as well as the reset of higher-value average revenue per user (ARPU) subscribers with higher allowances on lower packs by Bharti Airtel and Idea Cellular," the report said. ARPUs are expected to fall by 9.2 per cent and 9.7 per cent for Bharti and Idea respectively for the fourth quarter compared to the preceding period.
Further, mobile revenues are likely to drop by 6.5-7.5 per cent, for period under review, the report said. "Challengers (RCom, Aircel and Tata Tele) are likely to report much steeper revenue drop compared to the top-3 players," the report said. Billionaire Mukesh Ambani's Reliance Jio on March 31 announced it had notched an unprecedented 72 million paid subscribers, and extended its deadline to April 15 for migrating other subscribers to its paid offer.
It had further sweetened the deal by announcing a 'complimentary offer' for three months to those who pay Rs 303 prior to April 15, thus offering data at rock-bottom prices. Paid tariff plan will kick-in only in July. Jio launched the inaugural free voice and data plan in September last year, and in December extended the freebies till March 31, 2017, much to the ire of other operators who alleged that such freebies not only hit their profitability and disrupted the market but were also against the regulations.
(With inputs from PTI)