Voice Call Pricing May Impact Jio Subscriber Addition: CLSA

The pricing of voice calls to other telecom networks by Reliance Jio could affect its subscriber additions and Bharti Airtel and Vodafone Idea are likely to keep tariffs unchanged and focus more on gaining 4G subscribers, broking firm CLSA said.

“With the IUC charge reducing Reliance Jio’s tariff discount to others, its subscriber additions could be impacted,” a CLSA report said.

The report further said narrowing tariff differentials is positive for incumbents as Reliance Jio’s latest move will likely make their current tariffs more competitive, assuming they keep tariffs unchanged.

“Bharti Airtel and Vodafone Idea will likely keep tariffs unchanged and focus more on gaining 4G subscribers”, it added.

Within three years of its launch of services in September 2016, Jio had garnered 340 million subscribers riding on the back of free voice calls and cheap data tariffs. It’s projections are to hit 500 million customers by mid-2020.

Earlier Reliance Jio had said it would charge IUC for outgoing off-net calls at Rs 0.06/minute (6 paise) for all calls made to other mobile networks. This charge will be over and above its standard monthly plans and levied through IUC vouchers priced between Rs 10-100 offering 124-1,362 monthly IUC minutes.

CLSA said R-Jio’s move is to recover cost and boost Ebitda (Earnings Before interest, taxes, depreciations and amortisation).

“We see this move as aimed more at recovering costs rather than raising tariffs because there has been no change in the company’s existing tariff plans. The IUC is being collected through IUC vouchers like a surcharge and this would be discontinued if and when TRAI decides to do away with IUC. If the regulator defers IUC elimination, then Reliance Jio’s current move could help boost its Ebitda by 40 percent. IUC charges will likely reduce Reliance Jio’s discount vs peers, which in turn could affect the company’s subscriber additions”, it said.―Newsd

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