After the Jio’s commercial launch in September 2016, the incumbent network operators tried everything to stay competitive in the market. While the price war is still going on, it’s good to see an increase in ARPU’s. By the end of last quarter, Airtel’s ARPU has increased from Rs 104 to Rs 123. Last year, the company introduced smart recharge plans which start from Rs 23 and extends the validity for 28 days for prepaid users. This also helped the company in removing the non-paying users.
For postpaid users, the company is now offering just four unlimited plans priced between Rs 499 and Rs 1599. All these factors could have helped the company to increase its ARPU. In the last two quarters, Vodafone Idea Limited (VIL) has lost 88 million customers. During the same period, it has increased its ARPU by 16% and reached Rs 104. Even with just three major networks left to fight in the market, Jio came out on top every month.
However, the recently ended quarter brought back Airtel to the top position in terms of data usage and voice calls made by its users. Airtel users have consumed 4.9% more data compared to the previous quarter. They are using as much as 11.04GB of data every month. During the same period, Reliance Jio’s data usage per customer stood at 10.9GB. Coming to the voice calls, the average consumption for every Jio user in the fourth quarter of FY19 is 823 minutes.
On Airtel, the voice calls usage has been increased from 726 minutes to 858 minutes during the same period. The company’s entertainment apps including Wynk Music, Wynk Tube, and Airtel TV are popular among its users. Both Airtel and Jio are making significant investments in the digital space. With better content and service, we expect ARPU and data consumption to increase further. With a consolidated net profit of Rs 107.2 crore during the January-March quarter, Airtel has seen a 24.36% jump when compared to the preceding quarter.
We don’t think the prices for 4G services will go down any further. While the company is cutting down on costs, it says there will be no compromise on network quality. The investments to improve the network will be made as required. While the market is now in a stable state, the 5G airwave auction will once again kick off the disruption. By the end of this year, the Government will likely go for the auction and Airtel is already calling for lower 5G auction base price.
We can expect to see fierce competition between Jio and Airtel for rolling out the commercial 5G services first in the Indian market. With 5G, we will see disruptive changes in several industries like transportation, IoT, health, gaming, and more. A couple of years back, Airtel has started deploying MIMO technology for internet speeds and better customer experience. It will also help the company in the faster rollout of 5G networks in the near future.
Earlier this year, the company deployed the LTE 900 technology in most of its circles. The 900 Mhz spectrum will offer better 4G indoor connectivity. For example, the Airtel users can now experience better signal reception even in the apartments and malls. Unlike 4G LTE, we don’t think the companies will be able to offer 5G services at cheap prices. On the other hand, Airtel with its Airtel Digital TV and Airtel Broadband is also competing with the major players in their respective industries.
Both Airtel Digital TV and Airtel Broadband will face stiff competition from Jio Home TV service. With Jio Home TV service, the company is rumored to offer broadband service and also use the same internet to stream Live TV channels. Based on the leaks, the Jio Home TV will soon make its debut with a basic plan of Rs 600 which includes 1Gbps broadband connection and can stream over 600 channels. As of now, the prices of DTH and home broadband service from Airtel are much higher than this rumored pricing.
We will be getting more details once the Jio Home service is near its launch. While the incumbent operators are gradually increasing their ARPUs, it’s still way lower than their targetted price of $3. Since the nation-wide 5G rollout will take at least a couple of years, the companies still have to be focused on improving their service in order to increase the ARPU. stay tuned on Phone Radar for more details!