Reliance Jio impact: Call rates see massive declines, down by over 67% in 5 years

Mumbai, Jul 24: In the last 5 years, call rates have declined by a massive 66% to 16 paise per minute, in what is being attributed to the disruption caused by Reliance Jio, according to analysts. After remaining in the range of 48 paise per minute to 51 paise per minute for over five years between March 2011 and September 2016, average voice tariff in India have fallen to a one-third of that original amount to 16 paise per minute as of March 2018, data released by the Telecom Regulatory Authority of India (TRAI) showed.
According to sectoral experts and analysts, the sudden fall in tariffs was attributable to the rise in competition caused by the disruptive entry of Reliance Jio in September 2016, which began offering services for free at the time of its launch, reports said.
The rates have fallen over the years, as data sourced from the TRAI’s quarterly filings on telecom sector’s performance show that while the per minute voice tariffs were range-bound between 48 paise and 51 paise till September 2016, it went down to 44 paise per minute in December 2016, and then to 31 paise in March 2017, plunging further down to 27 paise in June 2017, 23 paise in September 2017, 19 paise in December 2017 and to finally hit 16 paise per minute in March 2018.
Interestingly, a similar trend was observed in the minutes of usage on the networks of telecom operators, posting a slow growth between March 2011 and September 2016, and then suddenly increasing. Notably, as of March 2011, the average voice consumption was 349 minutes per subscriber per month, and it increased to 366 minutes per user per month as of September 2016. As of March 2018, it had increased to 584 minutes per user per month.
“Once voice was started being given for free (by Reliance Jio), there was a lot of pressure (on other operators) to reduce the voice component of the rates,” Rajan S Mathews, director general of Cellular Operators Association of India said.
With its launch, billionaire Mukesh Ambani-led Reliance Jio started offering bundled packs for a fixed time period, which included certain amount of data and unlimited voice services. This was soon replicated by other operators. Interestingly, director of telecom research firm ComFirst, Mahesh Uppal also attributed the steep fall in voice tariffs to the entry of Reliance Jio, terming it a response by existing operators to aggressive pricing by the new entrant, according to reports.
According to a recent report by rating agency firm, CARE Ratings, the average revenue per user (ARPU) from GSM services for the quarter-ending December 2017 fell on a sequential basis for sixth quarter in a row to Rs 79 per month. Earlier in September 2016, this figure stood at Rs 121 per month, while in June 2015 it was Rs 126 per month. Idea Cellular, India’s third largest mobile service operator, which is in process of being merged with the second largest carrier Vodafone India — posted its sixth straight quarterly loss for the three-month period ended March 31, 2018.
Going ahead, Uppal said, companies would aggressively market data services to generate revenues. “The battle has moved from voice to the data market. Operators have to incentivise voice customers to use data. Most people are still unfamiliar with data services. They are not as simple as picking up the phone and making a call. So, data services will be aggressively promoted by operators in the short term. Apart from trying to bring people online, companies will also want people to spend more time online so that revenues are generated,” reports quoted Uppal as saying.