Price War: Reliance Jio Will Not Raise Tariffs, Bharti Airtel, Vodafone Idea Revenues To Suffer

With strong revenue growth and robust subscriber additions at the current level, Mukesh Ambani-owned Reliance Jio Infocomm is unlikely to increase tariffs now as analysts believe, indicating that there is little hope for a revenue recovery in the near term for competitors such as Vodafone Idea (VIL) and Bharti Airtel.

Reliance Jio executives told analysts from brokerage firms such as Goldman Sachs, Citi Research and Morgan Stanley that the telecom company’s key focus will remain customer addition, despite it having crossed 280 million customers, giving it an approximately 24 percent subscriber market share and more than 26 percent revenue market share.

“Jio has said it will not tinker with tariffs and risk disrupting the strong subscriber (growth) momentum as its focus in the near term remains on adding subscribers,” which cited a note from a Goldman Sachs analyst, who was present in Jio’s post-fiscal third-quarter earnings meeting.

At present, it seems that “revenues would stay stagnant for incumbent telcos until Jio reaches its earlier stated target of 400 million subscribers,” the financial daily quoted the global brokerage as saying.

Jio, which disrupted the telecom industry with free voice calls and cheap data tariffs, posted a jump of 65 percent in net profit to Rs 831 crore in the October-December quarter, mainly on account of an increase in subscriber base. Bharti Airtel and Vodafone Idea are both expected to again post huge losses later this month or early next month.

The financial daily also mentioned that industry observers have recently indicated that with robust revenue and subscriber growth, Jio in 2019 would not chase customers in the way it did over the last two years. This could have given Vodafone Idea and Bharti Airtel some score for marginal price rise this year. And any such hike could have led to some revenue recovery for the incumbent telecom firms. But Reliance Jio’s remarks before analysts seem to have poured cold water on this hopes.—Times Now