Reliance Jio is paying the price for being the ‘second SIM’ of choice
- Last week, Jio increased its calling tariffs by 6 paise per minute.
- India Ratings says that the industry’s average revenue per user (ARPU) will go up by 15-18% after Jio’s price hike.
- Jio’s data tariffs are 25-30% cheaper than that of Airtel and Voda-Idea.
- Jio is a net payer of IUC charges, whereas Voda-Idea and Airtel are net-receivers of IUC receipts--as calls originate from Jio and land on other networks.
It had to happen one day. But Reliance Jio’s move to increase tariffs came sooner than expected. Even as Jio, Vodafone Idea and Airtel are teasing each other over it on social media, and thousands are trolling Mukesh Ambani for ‘breaking his free’ promise---it is good news for the industry.
At least that is what India Ratings believes. Jio charging its customers 6 paise per minute on its ‘free’ calling package—can help increase the rising margins of the industry. The sector’s average revenue per user will go up by ₹9, and in general increase by 15-18% according to the rating agency.
Like Jio says in its tweet, this amount will be going to Vodafone Idea and Airtel as Jio can no longer get away without paying telecom department’s mandatory inter-connection (IUC) charges. This is the charge paid to a network which is receiving calls, by the network from where a call originates. In an ideal situation, the amount all networks pay each other should balance out—considering their subscriber number is around the same.
However, that is not to be. Jio has the most to lose. The offnet minutes of usage is 64% for Jio, while it is at 41% for Voda-Idea and 45% for Airtel. “Also, of the total offnet voice traffic, net incoming minutes as a proportion of total offnet minutes stands at negative 29% for R-Jio whereas the same is 9% and 19% for Airtel and Voda-Idea respectively, implying that network voice traffic imbalance is significantly higher for R-Jio compared with peers. Hence, R-Jio remains a net-payer of IUC expenses, whereas Voda-Idea and Airtel are net-receivers of IUC receipts,” says India Ratings.
Basically, calls originate from Jio and land on other networks.
Jio users continue to keep other network SIMs
It means that more people are using Jio SIMs for its cheap data plans, and also for making the ‘free’ calls it offers. It makes sense as Jio’s data tariffs are 25-30% cheaper than that of Airtel and Voda-Idea. Yet, users have not given up their basic SIMs which belonged to other networks, and continue to exist.
These numbers are ‘primary’ phone numbers which are key to their bank accounts and other necessary identifications. And, few seem to believe that cheap tariff party will not continue to exist. All mixed with the ease of owning multiple SIMs have played against Jio. Had subscribers chosen to keep only Jio connections and get rid of others, they would have ported to it. Looks like not many have done that.