Jio's lead in market share gain can be dampener to revenue gain without tariff hikes.
The minimum recharge plans introduced by incumbent telcos like Vodafone Idea and Bharti Airtel has already reached its target base, according to analysts, with Airtel managing to maintain a price premium, compared to rivals.
On the other hand, Reliance Jio's consistently growing subscriber base has not been supported by any tariff increase even in postpaid, an area where incumbent telcos are rapidly improving.
An analysis of more than 100 mobile tariff plans across Jio, Bharti Airtel, and Vodafone Idea reveals incumbents command 1.5-2x premium pricing in postpaid and 15-30 per cent premium in prepaid offers, compared to Jio, according to a CLSA research. Essentially, Airtel has managed to retain high-paying users at the cost of losing subscribers, at present.
"While Jio tariffs underscore consistent (market) share gains, the lack of ramp-up in postpaid is surprising. Among incumbents, we note Bharti's expansion in postpaid subscribers and market share performance, compared to Vodafone Idea," noted Deepti Trivedi, research analyst CLSA.
The 28-day mobile plans are giving telecom operators maximum returns, as longer duration prepaid plans tend to be at a discounted rate in the range of 10 per cent and 45 per cent. According to the report, Airtel's postpaid plans are at a premium, compared to Jio and even Vodafone Idea. Jio has the cheapest postpaid plan, priced at Rs 199. While Airtel has consolidated its postpaid offering into four plans priced from Rs 499 to Rs 1,599, it also selectively offers a Rs 399 plan with 40 gigabyte (GB) data. Besides having postpaid plans at similar price points to Airtel, Vodafone Idea has a cheaper Rs 299 plan, with 30GB data and unlimited voice.
In addition, Airtel's premium pricing is supported at present by postpaid plans that offer more content, with a three-month Netflix subscription and yearly subscriptions of Amazon Prime and Zee5. Vodafone Idea has bundled only Amazon Prime and Zee5, giving Airtel a head start on monetising broadband subscribers effectively.
"The average revenue per user rise has been a function of lower subs. Therefore, it is not leading to any material rise in wireless revenue. We expect moderation in mobile broadband subs, with net additions of just 6 million/4.5million for Bharti/Vodafone idea, which is much below our expectation and is difficult to comprehend, as incumbents are expanding 4G coverage and capacity," wrote Sanjesh Jain, research analyst, ICICI Securities.
Jain estimates most of the minimum recharge plan subscriber base has already been captured by the incumbent telcos, despite fewer mobile broadband net additions and no material tariff hike in the April-June quarter.
Even as Airtel is rapidly increasing the broadband base, Airtel's rural growth continues to be a concern. According to the recent data shared by the Telecom Regulatory Authority of India, even as 13.7 million rural subscribers started using internet plans in the January-March quarter, there was also an exodus of 16 million users from the rural wireless subscriber base. Airtel lost over 19 million rural subscribers.