Monday , February 18 2019

Reliance Jio effect: Telecom revenues declined to Rs 1.88 trillion for the first time since 2008

Reliance Jio impact

Reliance Jio launch has declined the annual revenue of the telecom firms and also triggered consolidation in the Telecom Industry.

The Annual revenue of the telecom companies reduced for the first time since 2008 to Rs1.88 trillion due to the effect of the promotional offers provided by the telecom operator Reliance Jio.

According to the reports from brokerage CLSA, it is also further expected that it would decline more to Rs1.84 trillion in 2017-18.

In the next following year, it also projected revenue of Rs 18.7 lakh crore in 2018-19 which is comparatively lower than the Rs 19.3 lakh crore grossed in 2015-16.

The main reason for the decline of Annual revenues of the telecom firms is due to the Launch of Reliance Jio of Mukesh Ambani’s which has forced the other telecom operators to decline the prices.

According to CARE Ratings, from the last December, the revenues of nine telecom firms have been declined to 1.1 percent.

Recently, the Telecom Regulatory Authority of India (TRAI) has advised the Reliance Jio to withdraw its Summer Surprise offer which provides free data and voice calls for the users of Jio.

By looking the offers of Reliance Jio, the competitors also declined their prices which resulted in the dilution of the average revenue per user (ARPUs) at the upper end of subscribers, according to CLSA.

According to CARE data, in the December quarter, the Average Revenue per User (ARPU) of Bharti Airtel declined by 10.4 percent to Rs 172 while Idea has fallen by 10.8 percent to Rs 157, as per CARE data.

This is all because of Reliance Jio which has more than 100 million users since its launch where it offered free voice calls and data and became rivals for all telecom companies and eroding industry profitability.

Now, the telecom companies mainly focused on more profits and average revenue per user (ARPUs).The Jio offers also made mergers between the telecom firms where the merger of the  Vodafone – Idea cellular to create the largest Telecom firm in the country. Even the Bharti Airtel merged with Telenor.

TRAI said that the lower tariffs and promotion offers are lowering the administration revenue which results in the telecom’s commitments, spectrum payments, and repayment of loans and hitting financial sector.

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