Jio effect: 5 things that show telecom sector will never be the same again
By Team / 2017-04-06

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If the December quarter was bad for the telecom sector, the March quarter could be worse. The full impact of Reliance Jio's (RJio) service will be felt from the March quarter as people had still been trying out the service and the size had been growing to peak levels towards the end of FY16. On every parameter -- realisations, volumes, revenues, margins or debt -- companies are likely to report numbers that are at multi-year lows/peaks.

Here are five things from the March quarter that stand out:

ARPU is in, all other metrics are out

The launch of free offers and attractive packages has made a number of operational metrics like data revenue per megabyte and average revenue per minute redundant. Harsh Jagnani of ICRA says that given the bundled offers by all telecom operators, the 'primary metric which will be tracked' going ahead will be average revenue per subscriber or ARPU. RJio's bundled offers, allowing users unlimited calls and data usage, is the prime reason for this sea change.

Revenues take a dive as ARPUs hit 5-year lows

CRISIL Research estimates that March quarter revenues for the four listed players will fall by 10 per cent year-on-year as compared to the 5 per cent year-on-year fall in the December quarter. The reason for the sharp decline is not only fall in tariffs, both for data and voice, but also the dip in volumes given a large amount of data usage shifted to RJio. Industry ARPUs have been estimated to fall to five-year lows of around Rs 150. With RJio coming out with a new deal for its users, the pain will aggravate and extend to the June quarter.


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