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Jio may go easy on tariff hikes due to low user additions in last quarter of 2020, analysts predict

According to a report, analysts have predicted that Jio will not increase the tariff rates anytime soon because of the low subscriber additions in the last quarter of 2020.

twitter-logoYasmin Ahmed | January 26, 2021 | Updated 15:43 IST
(Picture: Reuters)

Highlights

  • Jio’s monthly churn rate for wireless subscribers increased to 1.63 per cent in the December quarter.
  • Jio reported 411 million subscribers at the end of December and told analysts the company is seeing strong traction in its home broadband and enterprise segment.
  • Some analysts have predicted Jio’s quarterly ARPU to decline in the March quarter of 2021 as the telco has now scrapped IUC from January 1, 2021.

Jio may not immediately increase tariff rates in the first quarter of 2021 due to the low subscriber additions in the last quarter of 2020, according to analysts. According to an ET Telecom report, Jio's monthly churn rate for wireless subscribers rose from 0.46 per cent in the June quarter to 1.69 per cent in the September quarter and 1.63 per cent in the December quarter. Churn applies to the number of subscribers who cancel or do not renew a subscription.

"The rise in monthly subscriber churn to over 1.5% for the past two quarters is impacting Jio's net additions, which may deter it from taking tariff hikes in the near term," brokerage Jefferies said in a note seen by ET. The publication also cited JM Financial which noted that Jio's net subscriber additions were subdued due to market share losses in incremental mobile broadband subscribers.

Reliance Jio reported a net profit of Rs 3291 crore, in Q4 of 2020 which was 16 per cent higher than the previous quarter, with revenues rising 6 per cent to Rs 18492 crore. Jio also reported average revenue per user of Rs 151. Jio's subscriber base on December 31 stood at 410.8 million with the company adding 5.2 million net new users on its network.


As of October 2020, Jio led with the overall subscriber base of 406.36 million, followed by Airtel with 330.29 million subscribers followed by Vi with 292.84 million subscribers. BSNL's customer base at the end of October was 118.98 million. Jio reported 411 million subscribers at the end of December.

Axis Capital has predicted Jio's quarterly ARPU to decline in the March quarter of 2021 as the telco has now scrapped interconnection usage charges from January 1. Jio's management told analysts the company is seeing strong traction in its home broadband and enterprise segments, which have scaled up rapidly with services offerings across the country.


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