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Reliance Jio May Be Telecom Industry’s New Benchmark For Revenue Per User

Telecom industry’s average revenue per user is expected to fall.



An advertisement for Vodafone India Ltd. is displayed on the wall of a tea vendor’s stall in New Delhi (Photographer: Prashanth Vishwanathan/Bloomberg)
An advertisement for Vodafone India Ltd. is displayed on the wall of a tea vendor’s stall in New Delhi (Photographer: Prashanth Vishwanathan/Bloomberg)

Billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd. is turning into a benchmark for what rival wireless carriers can earn.

Average revenue per user for the industry will remain dependent on Reliance Jio’s future offerings, which are likely to remain aggressive, brokerage Jefferies India Pvt. Ltd said.

Telecom industry’s revenue fell 11 percent in the year ended March, the first time ever, largely due to tariff cuts as Reliance Jio offered free services for the first six months before started charging from April. ARPUs fell for Bharti Airtel Ltd., Vodafone India Ltd. and Idea Cellular Ltd. in the range of 8-10 percent in the year ended March. And the trend is likely to continue.

Industry ARPUs declined 11 percent in FY17, we expect another 11 percent fall in FY18.
CLSA Report (June 9) 
Reliance Jio May Be Telecom Industry’s New Benchmark For Revenue Per User

Vodafone India, however, expects a recovery in average revenue per user. Its ARPU of lower-segment subscribers offset some decline from high-value customers. The Indian arm of the Anglo-Dutch operator Vodafone Plc saw its market share rise 40 basis points to 24.4 percent in fourth quarter, according to data released by the Telecom Regulatory Authority of India.

Vodafone India’s debt has risen substantially to Rs 60,200 crore due to spectrum payments, bringing the company’s debt to EBITDA ratio to a 5.1 – the highest among the top three telecom wireless carriers.

Reliance Jio May Be Telecom Industry’s New Benchmark For Revenue Per User

The company told analysts that its merger with Idea Cellular Ltd. is on track and is expected to be completed by 2018. Till then, the company’s focus will be to maintain its leadership position in 12 circles which nearly contribute 80 percent of its revenue. Vodafone is also open to monetising 42 percent holding in Indus Towers Ltd, it said.