‘Jio’ Price War Leads to Record Decline in Central Revenue

‘Jio’ Price War Leads to Record Decline in Central Revenue ‘Jio’ Price War Leads to Record Decline in Central Revenue

by Abhranil Das

Jio Fever has covered more than 80% of rural India with its amazing offer and services. Everyday 8 out of 10 people are using Reliance Jio. 

For the first time in last seven years, telecom companies are facing huge loss in their revenue. Currently it is little over Rs 1.88 lakh crore and it is still falling. According to CLSA (Investment banking company) it is further expected to decline to Rs 1.84 lakh crore in the financial year 2017-18.

After doing lot of innovative promotion Reliance Jio has accumulated more than 100 million subscribers within a year. Since its inception on Sep 2016, it has become fastest network to reach the 100 million fan base. 

According to recent report by TRAI, Reliance Jio has forced most of the telecom industry to slash their prices which previously most of the common people cannot afford. To compete with the prices provided by JIO, a lot of big telecom operators have to collaborate with each other. Recently Idea-Vodafone and Telenor-Airtel has to form a merger to tackle Reliance Jio. 

Price war initiated by Jio has initiated a series of complaints by other operators to TRAI (Telecom Regulatory Authority of India). Most complaints are regarding recent ‘Summer offer’ provided by Jio which provides 30GB cellular data and unlimited voice services for next three months.

Keeping in mind that all promotion offers and reduced tariffs are lowering the central revenue, TRAI has asked Reliance to roll back the offer. TRAI is concerned about the impact the other telecom operators are currently facing due to reduced tariffs. It is becoming hard for them to meet their normal payments excluding profits and salaries of employees.

According to the CARE Ratings for quarter Sept-Dec, revenue chart of major telecom operators falls by 1.1%. Average revenue per user of Airtel declined by 10.4% (Rs 172) and Idea’s fell by 10.8% (Rs 157). The overall operating margin for telecom companies sticks at 28.43%.

Share your views below