Reliance Jio’s new family postpaid plan at a monthly charge of ₹174 per connection is set to delay tariff hikes and heat up the competition in postpaid segment where it lags behind Bharti Airtel and Vodafone Idea.
For a family of four, the company is offering a plan where the main member at ₹399 per month gets three add-on connections at ₹99 per SIM, effectively working out to a combined bill of ₹696 per month. In a bid to attract users, RJio is offering the plan free for a month as a trial.
The new tariff plans are at a 17-30 per cent discount to its existing plans and 30 per cent cheaper than the Airtel’s base family plan of ₹999 (combined) with four connections.
However, RJio’s base plan is more expensive per GB though it introduced an unlimited data plan at ₹599. RJio’s base family plan offers 75 GB data and no OTT subscriptions. Compare this with Airtel’s ₹999 family plan where users get more data at 100 GB, an addition of 30 GB for each extra connection and OTT subscriptions. Vi’s base plan comes for ₹699 with two connections and total 80 GB data with OTT subscriptions and Vi Movies thrown in.
This will impact the telecom sector by intensifying competition and delay in tariff hikes. There were expectations that to bolster their profitability margins, telecom operators would be raising tariffs in the postpaid segment. Analysts said that with RJio having set the ball rolling, the other two competitors may be forced to make some tweaks to their base family packs by either lowering the fee per additional SIM or lower the data available per connection.
Kotak Institutional Equities said in a note that for every ₹10 lower average revenue per user, the earnings before interest depreciation, tax and amortization could see a drop of 2 per cent for RJio, 3 per cent for Airtel and 10 per cent for Vodafone Idea.
RIL’s intent to break into Airtel’s dominance is understandable given that in terms of adjusted gross revenue Airtel has been gaining market share at a faster pace than RJio and narrowing the gap between the two companies.
The postpaid segment, which is just under 8 per cent of the overall wireless subscriber base, is not that price sensitive compared to the prepaid segment. Postpaid subscribers are more loyal to their service providers while those on corporate plans would necessarily have to stick to the service provider chosen by their companies.
With an unbeatable 55 per cent market share in the prepaid segment, RJio is now making a determined onslaught on the postpaid segment as well. The Hindu BusinessLine